Health Information Technology in The United States 2009

Health Information Technology
in the United States:

On the Cusp of Change, 2009
About the Robert Wood Johnson Foundation
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(MGH) and Partners Health System is dedicated to conducting world-class
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Table of Contents
Introduction�� 4
Major Content Areas �� 4
Previous Work�� 5
Endnotes �� 7
Chapter 1: Beyond the Doctor’s Office: Adoption of Electronic Health Records in U.S. Hospitals�� 8
Methodology �� 8
Survey Development �� 8
Survey Sample and Administration�� 9
Survey Content �� 9
Development of Measures of EHR Use�� 9
Findings �� 11
Characteristics of Responding Hospitals�� 11
Adoption of Clinical Functionalities in Electronic Format �� 11
Adoption of an Electronic Health Record �� 11
Barriers and Facilitators of EHR Adoption �� 15
Discussion �� 17
Endnotes �� 19
Chapter 2: Adoption of Electronic Health Records Among Hospitals that Care for the Poor:
Early Evidence of a New Healthcare Digital Divide?�� 21
A Note on Definitional Issues �� 22
Defining Safety-Net Hospitals �� 22
Hospital Information Technology Survey �� 22
Defining EHR Adoption �� 23
Defining Quality of Care�� 23
Key Findings�� 23
Safety-Net Hospitals�� 23
Rates of EHR Adoption �� 24
Rates of Adoption of Key Clinical Functionalities �� 26
Quality of Care and EHR Adoption�� 27
Barriers to and Incentives for EHR Adoption �� 28
Discussion �� 29
Endnotes �� 31
Chapter 3: State Roles in the Advancement of Health Information Technology �� 33
Overview of State-Level Activity on HIT�� 34
Planning and Oversight�� 36
Advancing Adoption and Implementation �� 37
Funding �� 39
Privacy Protection and Security�� 41
Health Information Exchange�� 43
Current State of HIE�� 43
Governance�� 44
Technical Operations �� 45
Challenges �� 46
Conclusion �� 46
Endnotes �� 47
Health Information Technology in the United States: On the Cusp of Change, 2009 1
Chapter 4: Recent Federal Initiatives in Health Information Technology�� 50
The American Recovery and Reinvestment Act of 2009�� 50
Health IT Infrastructure and New Program Development�� 51
Federal Policy and Standards Framework�� 53
Advisory Committees �� 53
Medicare and Medicaid Payment Incentives�� 55
Medicare�� 55
Medicaid�� 57
Privacy Reforms�� 58
Expanded Patient Rights�� 59
Increased Duties for Business Associates and Other Entities�� 60
Privacy and Security Breach Notices �� 60
Restrictions on Marketing, Fundraising and the Sale of PHI�� 61
Limited Datasets and De-Identified Data�� 61
Improved Enforcement �� 62
Challenges �� 62
Endnotes �� 64
Chapter 5: Potential Implications of Widely Adopted Meaningfully Used HIT: Is Quality Measurement and
Reporting About to Take Flight?�� 70
Measurement and Reporting Efforts are Building and Accelerating �� 71
The “Measurement Enterprise” �� 73
Progress on Public Reporting �� 74
The Measurement Enterprise Begins to Organize Itself�� 76
Regional Measurement and Reporting Efforts �� 77
Better Quality Information Pilots �� 78
Aligning Forces for Quality Initiative�� 78
Chartered Value Exchanges�� 79
Measurement and Reporting Functionality in Adopted EHRs—How Was it Going Pre-HITECH?�� 81
Will HITECH Driven Meaningful Use Accelerate Measurement and Reporting Efforts? �� 82
Status of the Meaningful Use Definition�� 83
How Will Meaningfully Using EHRs Impact the Measurement of Clinical Quality and the Reporting of
Those Measures?�� 84
The Role of Consumers in Determining Measures for Meaningful Use �� 87
Impact of Meaningful Use Measures on Disparities �� 87
Transition From Claims-Based Measures to Clinically-Based Measures—Who’s Minding the Glide Path? �� 89
Why All the Fuss? Measurement and Reporting are Necessary for Payment Reforms that
Reward High Quality and Value �� 90
Endnotes �� 93
2 Health Information Technology in the United States: On the Cusp of Change, 2009
List of Tables
Expert Advisory Group. �� 6
Expert Consensus Panel.�� 6
Requirements for the Presence of an EHR and Current Level of EHR Adoption.�� 10
Characteristics of Responding and Non-Responding Acute-Care Non-Federal Hospitals �� 12
Select Functionalities and Their Level of Implementation in U.S. Hospitals�� 13
Adoption of Comprehensive and Basic EHR Systems, by Hospital Characteristics�� 14
Hospital Characteristics by DSH Index Among Responders to the HIT Survey�� 24
Selected Electronic Functionalities and Their Level of Implementation in DSH Index Responders�� 25
The Relationship Between DSH Index and Quality of Care, Stratified by EHR Adoption�� 27
HIT Activities at the State Level�� 35
2007 and 2008 Enacted Legislation �� 37
Medicare Incentive Payments for Adoption and Meaningful Use of Certified EHR�� 56
Medicaid Incentive Payments for Adoption and Meaningful Use of Certified EHR �� 57
Privacy Reform �� 59
List of Figures
Major Barriers to Adoption of EHRs Among Hospitals That Have EHR Systems* Versus Those That Do Not�� 15
Facilitators Likely to Have a Major Positive Impact on EHR Adoption Among Hospitals That Have
EHR Systems* Versus Those That Do Not �� 16
Rate of Adoption of EHRs by U.S. Hospitals, 2008 �� 26
Major Barriers to HIT Adoption Among DSH Hospitals with No EHR �� 28
HIE Initiatives Across the U.S.�� 44
ONCHIT Operating Plan Highlights �� 51
HIT Policy and Standards Committee �� 53
Measurement Enterprise Organizational Wheel�� 76
Regional-National Feedback is Essential �� 80
Quality Framework with Electronic Measurement and Reporting�� 85
Introduction
Catherine M. DesRoches, Dr. P.H., and Ashish K. Jha, M.D., M.P.H.
In our inaugural report in 2006, Health Information Technology in the United States:
the Information Base for Progress, we detailed the challenges faced by policy-makers
working toward the goal of increased adoption of health information technology
(HIT). Since that time the role of health information in helping to promote higher
quality, more efficient health care has taken a central position in the current debate
over health care reform. Methods to speed HIT adoption have received bipartisan
support among U.S. policy-makers and the recently signed American Recovery and
Reinvestment Act of 2009 (ARRA) has made promoting a national interoperable
health information system a priority and authorized significant resources to
achieve this goal.
As we have shown in earlier reports, despite broad consensus on the potential

benefits of HIT, U.S. physicians have been slow to adopt these technologies. Prior
reports have focused on adoption of electronic health records (EHRs) by individual
physicians while also noting the potential of EHRs to improve care in the hospital
setting.1, 2 However, there has been scant data on EHR adoption among U.S.
hospitals and much of the existing data has suffered from serious methodological
shortcomings. Prior data on hospitals’ adoption of EHRs or key EHR functions
(such as computerized physician order entry [CPOE]) suggest levels of adoption
ranging between 5 percent3 and 59 percent4, reflecting differing definitions of
what constitutes an EHR, convenience samples and low survey response rates.
To provide more precise estimates of EHR adoption among U.S. hospitals, the
Office of the National Coordinator for Health Information Technology
(ONCHIT) of the Department of Health and Human Services (HHS)
commissioned a study to measure the current prevalence of EHR adoption
in American hospitals to facilitate tracking of these levels over time.
In Health Information Technology in the United States, 2009: On the Cusp of Change, we
use the data collected for ONCHIT to focus on EHR adoption in the inpatient
setting. We report on several important policy issues. These include the rate of
adoption of EHRs among U.S. hospitals generally and among safety-net hospitals,
changes in both state and federal policy, and the potential of EHRs to change the
quality measurement enterprise.
Major Content Areas
Chapter 1, Beyond the Doctor’s Office: Adoption of Electronic Health Records in U.S.
Hospitals, describes the results of our 2008 hospital survey and provides estimates of
the adoption of both basic and comprehensive EHRs among U.S. hospitals. Further,
the chapter discusses both barriers to and incentives for adoption at the hospital level.
In Chapter 2, Adoption of Electronic Health Records Among Hospitals that Care for the
Poor, we provide estimates of the adoption of basic and comprehensive EHRs, and
key clinical functionalities among safety-net hospitals in the U.S. This chapter also
examines the relationship between EHR adoption and quality metrics among
these hospitals.
In Chapter 3, State Roles in the Advancement of Health Information Technology, we
review what is known about state level initiatives to promote EHR adoption
and use. This chapter highlights current state roles in the dissemination of
HIT and the unprecedented financial opportunities afforded under the Health
Information Technology Economic and Clinical Health Act (HITECH), part of
ARRA, which could further foster adoption by providing resources to states with
present fiscal struggles.
In Chapter 4, Recent Federal Initiatives in Health Information Technology, we

examine the American Reinvestment and Recovery Act with a particular focus
on “meaningful use” incentives and how these will affect providers caring for
vulnerable populations.
Finally, Chapter 5, Potential Implications of Widely Adopted Meaningfully Used HIT:

Is Quality Measurement and Reporting About to Take Flight?, reviews the issue of
public reporting of quality data. This chapter focuses on a potentially important
effect of EHR adoption: how their widespread adoption will change public
reporting of quality data. This technology may make clinical data extraction both
efficient and inexpensive, which would facilitate large-scale clinical performance
measurement efforts.
Previous Work
Our team draws from several institutions with relevant expertise: the
George Washington University School of Public Health and Health Services’
Department of Health Policy; the Institute for Health Policy at Massachusetts
General Hospital/Partners HealthCare System; and the Harvard School of
Public Health. Previous projects of this group include: our RWJF-funded
2006 and 2008 reports; studies of the costs of developing a national health
information network and establishing national rates of adoption of EHRs
among physicians and hospitals; an RWJF colloquium on measuring the
diffusion of health information technology; and an RWJF analysis of the
legal barriers to widespread adoption of electronic health records.
Also critical to our research process was the creation of an Expert Advisory
Group (EAG) that provided advice and feedback on the development of our
hospital survey. This group, comprised of hospital information technology (IT)
leaders and survey experts, provided critical insights on both the development
of the survey and interpretation of the data. In addition, our Expert Consensus
Panel (ECP) continues to play a critical role in our research project. This panel,
consisting of national experts in relevant areas, helps guide our development of
methodologies and analysis for measuring the adoption and effect of EHRs.
We are extremely grateful to these individuals for their enormous contributions
to these efforts and for their generosity in donating their time.
Table 1: Expert Advisory Group (EAG) Table 2: Expert Consensus Panel (ECP)
Carmella Bocchino, R.N., M.B.A.

Michael Davis
Senior VP, Medical Affairs
Executive VP, Products and Services
America’s Health Insurance Plans
HIMSS Analytics
230 East Ohio, Suite 600 Paul Cleary, Ph.D.
Chicago, IL 60611 Dean of Public Health
Yale School of Medicine
Nancy Foster
Francois deBrantes
Senior VP
National Coordinator
American Hospital Association
Bridges To Excellence
One North Franklin St.
Chicago, IL 60606
Terry Hammons, M.D., S.M.
Sr. VP, Research and Information
John Glaser, Ph.D. Medical Group Management Association
VP and CIO
Partners HealthCare System, Inc. Bernard L. Hengesbaugh, M.B.A.
One Constitution Center, 2nd Floor COO, American Medical Association
Charlestown, MA 02129
Kevin Kearns, M.B.A.
President and CEO
Jim Jirjis, M.D. Health Choice Network, Inc.
Assistant CMO
Vanderbilt Medical Group and Clinic
Mark Leavitt, M.D., Ph.D.
1215 21st Ave. South
Chair, CCHIT
Nashville, TN 37232
Michael W. Painter, J.D., M.D.
Barbara Rudolph, Ph.D. Senior Program Officer
Director, Leaps and Measures The Robert Wood Johnson Foundation
The Leapfrog Group
1081 K Street, NW Mark V. Pauly, Ph.D.
Suite 701-L Bendheim Professor
Washington, DC 20006 Health Care Systems Department
The Wharton School, University of Pennsylvania
Alden Solovy
Executive Editor and Associate Publisher Mary A. Pittman, Dr.P.H.
Most Wired Magazine President
One North Franklin St. Health Research & Educational Trust
Chicago, IL 60606
Sarah Hudson Scholle, M.P.H., Dr.P.H.
Caroline Steinberg National Committee for Quality Assurance
VP for Health Trends Analysis
Bruce Siegel, M.D., M.P.H
American Hospital Association
Research Professor
One North Franklin St.
Department of Health Policy
Chicago, IL 60606
George Washington University School of Public
Health and Health Services
Paul Tang, M.D.

Palo Alto Medical Foundation
John R. Lumpkin, M.D., M.P.H.

Senior VP and Director
Health Care Group
The Robert Wood Johnson Foundation
Sally C. Morton, Ph.D.

Vice President for Statistics & Epidemiology
RTI International
Endnotes
1. Blumenthal D, DesRoches C, Donelan K, et al. Health Information Technology
in the United States: The Information Base for Progress. Robert Wood Johnson
Foundation, 2006.
2. Blumenthal D and DesRoches CM, eds. Health Information Technology in the
United States, 2008: Where We Stand. Robert Wood Johnson Foundation, 2008.
3. Cutler DM, Feldman NE and Horwitz JR. “U.S. Adoption of
Computerized Physician Order Entry Systems.” Health Affairs (Millwood),
24(6):1654–1663, 2005.
4. Laschober M, Maxfield M, Lee M, et al. “Hospital Responses to Public
Reporting of Quality Data to CMS: 2005 Survey of Hospitals.”
Health Care Financing Review, 28(3): 62–76, 2007.
Chapter 1: Beyond the Doctor’s Office: Adoption of Electronic
Health Records in U.S. Hospitals
Ashish K. Jha, M.D., M.P.H., Catherine M. DesRoches, Dr.P.H., Eric G. Campbell, Ph.D.,
Karen Donelan, Sc.D., Sowmya R. Rao, Ph.D., Timothy G. Ferris, M.D., M.P.H.,
Alexandra Shields, Ph.D., Sara Rosenbaum, J.D.
In our prior reports, we provided estimates of the rate of adoption of EHRs

among ambulatory care providers, and noted the lack of methodologically
rigorous data on adoption in the hospital setting. 1, 2 In these reports we concluded
through rigorous and defined assessment that methodology, quality, and results
of previously administered hospital surveys measuring national adoption of
HIT varied greatly.3, 4, 5 These prior data suggested adoption rates for EHRs or
for several of their key functionalities (e.g., computerized provider-order entry
[CPOE] for medications) in hospitals ranged from 5 percent6 to 59 percent 7
reflecting differing methods, convenience samples, and definitions of EHRs.
The recent authorization of nearly $30 billion in funding to spur EHR adoption
reinforces the need for systematic, methodologically rigorous measures of EHR
adoption in the hospital setting. Without such measures, it will be impossible
to assess the effect of this funding, as well as other federal initiatives to create
a nationwide health information technology infrastructure. In this chapter,
we provide estimates of the adoption of EHRs and key individual electronic
functionalities based on high quality survey data as a baseline against which
we can measure progress toward this national goal.
Methodology
Survey Development
We developed our survey by first examining and synthesizing prior hospital-

based surveys of EHRs or related functionalities (such as CPOE) administered
in the previous five years.8, 9, 10 We then convened an Expert Advisory Group
(EAP), comprised of experts in HIT and hospital surveys to advise us and provide
feedback on our survey instrument (see Introduction for a list of EAP members).
In addition to this group, the survey was reviewed by several chief information
officers (CIOs), other hospital leaders, and survey experts for feedback. As with
our prior physician survey, our Expert Consensus Panel (ECP) was instrumental
in providing input on the survey content and design (see Introduction for a
description of the ECP). The final survey included questions assessing adoption
of key clinical functionalities and barriers to and incentives for EHR adoption.
Survey Sample and Administration
We collaborated with the American Hospital Association (AHA) to survey all

acute-care general medical/surgical member hospitals in the United States. The
HIT Supplemental Survey was sent as a supplement to the AHA annual survey
of members. Like the overall AHA questionnaire, the supplement was sent to
the hospital’s chief executive officer (CEO) who generally assigned it to the most
knowledgeable person in the organization. Hospitals that did not respond to the
initial mailing were contacted by telephone and reminder letters encouraging
them to complete the survey. The survey recipients also had the opportunity to
complete the survey online. The survey was initially mailed in March 2008 and
our in-field period ended September 30, 2008.
Survey Content
Respondents were asked to report on the presence of 32 clinical HIT

functionalities. Response categories were “fully implemented in all major
clinical units,” “implemented in one or more (but not all) major clinical units,”
and “not yet fully implemented in any unit in the hospital.” We asked respondents
to rate a series of financial and organizational factors as major barriers, minor
barriers, or not barriers to EHR adoption. Finally, respondents were asked to
assess the effect of specific policy changes on their likelihood of adoption.
Response categories were “positive impact,” “negative impact,” and “no impact.”
Development of Measures of EHR Use
Though the Institute of Medicine (IOM) has created an extensive list of potential
electronic clinical functionalities that could constitute an inpatient EHR,11 there
currently is no consensus on what key functionalities are the critical elements
necessary to define an EHR in the hospital setting. Therefore, similar to the
process we employed to develop our definition of a basic and comprehensive
EHR in the ambulatory setting, we asked our ECP to help us define the
functionalities that constitute an inpatient EHR.12 Using a modified-Delphi
process, the panel reached consensus on the 24 functions that should be present in
all major clinical units of a hospital to conclude that it has a comprehensive EHR
(Table 1).13 Similarly, the panel reached consensus on eight functionalities that
should be implemented in at least one major clinical unit (such as the intensive
care unit) in order for the hospital to have a basic EHR. The ECP disagreed on
the need for two additional functionalities (the presence of physician notes and
nursing assessments) to qualify as having a basic EHR. Therefore, we developed
two definitions of a basic EHR, one containing nursing and physician notes, and
the other without. In this report, we only present findings of the basic EHR that
include clinician notes, but have reported data for EHRs without clinician notes
in published work.14
We did not include electronic measurement or reporting capabilities in either of

our comprehensive or basic definitions (Table 1). This is important to note, given
the federal government’s current focus on “meaningful use” of HIT, which is likely
to include the use of such systems to report quality data. We discuss this issue
further in Chapter 5.
Chapter 1
Table 1: Requirements for the Presence of an EHR and Current Level of EHR Adoption
Comprehensive* Basic EHR † with Basic EHR † without

EHR Clinician Notes Clinician Notes
Electronic Clinical Documentation
Patient demographics X X X
Physician notes X X
Nursing assessments X X
Problem lists X X X
Medication lists X X X
Discharge summaries X X X
Advanced directives X
Results Viewing
Lab reports X X X
Radiology reports X X X
Radiology images X
Diagnostic test results X X X
Diagnostic test images X
Consultant reports X
Computerized Provider Order Entry
Laboratory tests X
Radiology tests X
Medications X X X
Consultation requests X
Nursing orders X
Decision Support
Clinical guidelines X
Clinical reminders X
Drug allergy alerts X
Drug-drug interactions alerts X
Drug-lab interactions alerts X
Drug dosing support X
Adoption Level (95% Confidence Interval) 1.5% (1.1%–2.0%) 7.6% (6.6%–8.3%) 10.9% (9.7%–12.0%)
Source: Jha AK, DesRoches CM, Campbell E, et al. “Use of Electronic Health Records in U.S. Hospitals.” New England Journal of Medicine, 360(16):1628–1638, 2009.
*Comprehensive EHR requires presence of each functionality in all clinical areas.
† Basic EHR requires presence of each functionality in at least one clinical unit in the hospital.
C hapter 1
Findings
Characteristics of Responding Hospitals
We received responses from 3,049 hospitals, or 63.1 percent, of all acute-care

general hospitals sampled. We excluded those hospitals located outside the 50
states and the District of Columbia (i.e., located in Guam, Puerto Rico, others)
and federal hospitals, which left us with 2,952 institutions. In alternative analyses
we included federal hospitals to determine their impact on our main study
findings. We found modest differences between respondents and non-respondents
and subsequently adjusted for potential non-response bias in all further analyses.
Adoption of Clinical Functionalities in Electronic Format
We examined the rate of adoption of specific electronic clinical functions among

U.S. hospitals first with bivariate analysis followed by multivariable regressions.
These analyses examined relationships between hospital characteristics (i.e., size
and teaching status) and adoption of HIT. We considered several qualities as
markers of a high technology institution, including having a Coronary Care Unit
(CCU), burn unit, or a positron emission tomography scanner. Because the results
were comparable, we only present data based on presence or absence of a CCU.
Our bivariate results were similar to those found in the multivariable analysis.
For brevity’s sake, we present only the bivariate results in this report.
We found large variations in the implementation of key clinical functionalities

across U.S. hospitals. Only a small minority of U.S. hospitals had implemented
physician notes (12%) and CPOE for medications (16%) across all major clinical
units (Table 2). In contrast, nearly 80% of U.S. hospitals reported adoption of
electronic laboratory and radiology reporting systems (Table 3).
Adoption of an Electronic Health Record
We then analyzed the rate of adoption of both the comprehensive and basic EHR,
again using both bivariate and multivariable analysis. Based on the definitions
created by the ECP, we found that 1.5 percent (95% confidence interval [CI]:
1.1% to 2.0%) of U.S. hospitals had a comprehensive EHR implemented across
all major clinical units and an additional 7.6 percent (95% CI: 6.6% to 8.3%) had
a basic EHR that includes physician and nursing notes available in at least one
clinical unit. If we included federal hospitals such as those run by the Department
of Veterans Affairs, the level of adoption of comprehensive EHRs jumps to almost
3 percent (95% CI: 2.3% to 3.5%) while the basic EHR with clinician notes would
be almost 8 percent (95% CI: 6.9% to 8.8%).
We found that several key characteristics were associated with adoption of EHRs.
Larger hospitals, major teaching institutions, those located in urban areas and
those that were part of hospital systems had higher rates of adoption of EHRs, as
did hospitals with higher levels of other technologies available (as identified by
the presence of a CCU). These findings are detailed in Table 4. Contrary to our
prior hypothesis, public hospitals had levels of EHR adoption comparable to non-
public institutions. Even comparing for-profit to nonprofit (public and private)
institutions, there were no significant differences in adoption.
Chapter 1
Table 2: Characteristics of Responding and Non-Responding Acute-Care Non-Federal Hospitals
Respondents Non-Respondents
(N=2952) (N=1862)
% %
Small (6 beds–99 beds) 48 50
Size Medium (100 beds–399 beds) 43 43
Large (400+ beds) 10 7
Northeast 14 12
Midwest 33 24
Region
South 37 41
West 17 22
For-profit hospitals 14 22
Ownership Private nonprofit hospitals 62 55
Public hospitals 24 23
Major teaching 7 4
Teaching Status Minor teaching 16 16
Non-teaching 77 80
Member of a system 43 47
System
Not a member of a system 57 53
Urban hospitals 62 60
Location
Rural hospitals 38 40
Hospitals with CCU 35 25

Technological Capability
Hospitals without CCU 65 75
Source: Jha AK, DesRoches CM, Campbell EG, et al. “Use of Electronic Health Records in U.S. Hospitals.” New England Journal of Medicine, 360(16):1628–1638, 2009.
CCU is Coronary Care Unit. P-value for each comparison <0.05.
C hapter 1
Table 3: Select Functionalities and Their Level of Implementation in U.S. Hospitals
Began No
Fully Fully
implementation implementation
implemented implemented
or resources and no specific
across all units in at least 1 unit
identified* plans
Electronic Clinical Documentation % % % %
Medication Lists 45 17 18 20
Nursing Assessments 36 21 18 24
Physician Notes 12 15 29 44
Problem Lists 27 17 23 34
Results Viewing
Diagnostic Test Images

37 11 19 32
(e.g., EKG tracing)
Diagnostic Test Results
52 10 15 23
(e.g., Echo report)
Lab Reports 77 7 7 9
Radiology Images 69 10 10 10
Radiology Reports 78 7 7 8
Laboratory Tests 20 12 25 42
Medications 17 11 27 45
Decision Support
Clinical Guidelines
17 10 25 47
(e.g., ß-blockers post-MI)
Clinical Reminders
23 11 24 42
(e.g., Pneumovax)
Drug Allergy Alerts 46 15 16 22
Drug-Drug Interaction Alerts 45 16 17 22
Drug-Lab Interaction Alerts 34 14 21 31
Drug Dosing Support

31 15 21 33
(e.g., renal dose guidance)
* Those who reported that they were either “beginning to implement in at least one unit” or “have resources identified to implement in the next year.”
Chapter 1
Table 4. Adoption of Comprehensive and Basic EHR Systems, by Hospital Characteristics
Have Comprehensive Have Basic* Have No Overall

EHR System EHR System EHR System P-value
Hospital Size % (Standard Error)
Small (6 beds–99 beds) 1.2 (0.3) 4.9 (0.6) 93.9 (0.6)
Size Medium (100 beds–399 beds) 1.7 (0.4) 8.1 (0.8) 90.2 (0.8) <0.001
Large (400+ beds) 2.6 (0.9) 15.9 (2.2) 81.5 (2.3)
Northeast 1.1 (0.5) 8.9 (1.4) 90.0 (1.5)
Midwest 1.7 (0.4) 6.6 (0.8) 91.7 (0.9)

Region 0.77
South 1.4 (0.4) 7.3 (0.8) 91.3 (0.8)
West 1.9 (0.6) 7.0 (1.2) 91.1 (1.3)
For-profit hospitals 1.3 (0.5) 5.2 (1.1) 93.5 (1.2)
Private non-profit hospitals 1.5 (0.3) 8.4 (0.6) 90.1 (0.7) 0.08
Public hospitals 1.7 (0.5) 5.8 (0.9) 92.4 (1.0)
Major teaching hospitals 2.6 (1.1) 18.5 (2.6) 78.9 (2.7)
Minor teaching 2.4 (0.7) 10.6 (1.4) 87.0 (1.6) <0.001
Non-teaching 1.3 (0.2) 5.6 (0.5) 93.1 (0.5)
Member of a system 2.1 (0.4) 8.4 (0.9) 89.5 (0.9)

0.006
Not a member of a system 1.1 (0.2) 6.3 (0.6) 92.6 (0.6)
Urban hospitals 1.9 (0.3) 8.4 (0.6) 89.7 (0.6)

<0.001
Rural hospitals 0.6 (0.3) 4.0 (0.7) 95.3 (0.8)
Hospitals with CCU 1.9 (0.4) 9.7 (0.9) 88.4 (1.0)

0.002
Hospitals without CCU 1.3 (0.3) 6.3 (0.6) 92.4 (0.6)
* Basic EHR system with the presence of clinicians’ notes.
CCU is Coronary Care Unit.
C hapter 1
Barriers and Facilitators of EHR Adoption
Finally, we asked respondents to assess the effect of several barriers to EHR

adoption. Among the nearly 90 percent of U.S. hospitals that did not meet our
definition of having an EHR system, financial concerns topped the list of major
barriers. These institutions reported, as major barriers, inadequate capital for
purchase (73%), concerns about maintenance costs (44%), physician resistance
(36%), unclear return on investment (32%), and lack of availability of staff with
adequate IT expertise (30%). (Please refer to Figure 1.)
Figure 1: Major Barriers to Adoption of EHRs Among Hospitals That Have EHR Systems*
Versus Those That Do Not
Major Barriers to EHR Adoption
80%
Hospitals with EHR
Hospitals without EHR
70%
60%
50%
Proportion of Hospitals
40%
30%
20%
10%
0%
Inadequate Capital Unclear ROI Maintenance Cost Physician Resistance Inadequate IT staff
for Purchase
Barriers
Source: Jha AK, DesRoches CM, Campbell EG, et al. “Use of Electronic Health Records in U.S. Hospitals.” New England Journal of Medicine,
360(16):1628–1638, 2009.
P-value for difference is <0.01 for each comparison except physician resistance (p-value = 0.20).
* Hospitals that have either a comprehensive EHR or a basic EHR that includes clinicians’ notes.
Chapter 1
Not surprisingly, therefore, most hospitals without EHR systems identified

financial factors as likely to have a major positive impact on EHR adoption:
additional reimbursement for EHR use (82%) and financial incentives for
adoption (75%). Other facilitators were cited far less frequently, including
having greater availability of technical support for IT implementation (47%)
and objective third-party evaluations of EHR products (35%). These results are
shown in Figure 2.
Figure 2: Facilitators Likely to Have a Major Positive Impact on EHR Adoption Among
Hospitals That Have EHR Systems* Versus Those That Do Not
Major Facilitators of EHR Adoption

100%
90%
Hospitals with EHR
80%
Hospitals without EHR
70%
60%
50%
40%
30%
20%
10%
0%
Additional Financial Incentives Technical Support for Objective EHR List of Certified
Reimbursement for for Implementation Implementation Evaluation EHRs
HIT Use
Potential Facilitators
Source: Jha AK, DesRoches CM, Campbell EG, et al. “Use of Electronic Health Records in U.S. Hospitals.” New England Journal of Medicine,
360(16):1628–1638, 2009.
P-value for each comparison >0.10.
*Hospitals that have either a comprehensive EHR or a basic EHR that includes clinicians’ notes.
C hapter 1
Discussion
Among U.S. acute-care non-federal hospitals, we found that less than 2 percent
have a comprehensive EHR system and less than 8 percent have a basic EHR
system that includes clinical notes. Information systems in greater than 90 percent
of U.S. hospitals do not meet the requirement for a basic EHR.
Our findings should not be interpreted to suggest that 90 percent of U.S. hospitals
lack any electronic systems. Although less than 10 percent of hospitals met the
definition of having an EHR, a much larger proportion of hospitals in the U.S.
have several key functionalities in place. A vast majority of institutions report
the presence of laboratory and radiologic reports, radiologic images, medication
lists, and some decision support functions available in electronic format. Others
reported that they planned to upgrade their information systems to an EHR by
adding functionalities, such as CPOE and physician notes, in the next several
years. However, both CPOE and physician notes are among the most challenging
functions to implement and whether hospitals will successfully do so is unclear.
Although we found somewhat higher levels of adoption among large teaching

hospitals, even among this group, a vast majority of institutions do not have
systems that meet the definition of a basic EHR. While these large academic centers
have greater access to financial resources necessary to acquire EHR systems, a vast
majority still have not made the investments necessary to implement these complex
systems. Although we expected to find lower adoption among public hospitals,
we did not find any such relationship in this analysis. However, as the next
chapter in the report highlights, we have found that hospitals with a higher
Disproportionate Share Hospital (DSH) Index have lower levels of adoption of
nearly every functionality examined. Those findings are consistent with our initial
hypothesis and suggest that tracking EHR adoption among providers that care
for the poor should be a high priority.
In 2006, we reported in the first Robert Wood Johnson Foundation examination

of the state of EHR adoption, that a relatively small minority of hospitals likely
had an EHR.15 However, our comprehensive review of the literature on hospital
HIT adoption found mostly poor assessments of EHRs directly and the only
reliable data were on levels of CPOE adoption, suggesting that between 5 percent
and 10 percent of U.S. hospitals had adopted this specific functionality.16, 17, 18
A prior AHA survey found higher prevalence of CPOE than we did,19 but had
a 19 percent response rate. A more recent analysis found that 13 percent of
the hospitals had implemented CPOE, prevalence similar to our own.20
However, this analysis used a proprietary database with both an unclear
sampling frame and unclear response rates.
Our survey respondents suggested that financial issues are the dominant barrier
to adoption, dwarfing other issues such as physician resistance, lack of an IT staff,
or lack of good products in the marketplace. Others have found that physician
resistance 21 can be detrimental to adoption efforts.22 Despite these results, it
is clear from other work that ensuring physician buy-in, often using clinical
champions, can be helpful in ensuring successful adoption.23
Chapter 1
A potentially important barrier to adoption is concern about interoperability:

very few EHRs in the marketplace in 2009 allow for easy exchange of clinical data
between hospitals, or from hospitals to physicians’ offices, or for the construction
and reporting of quality data. Further, very few communities have active efforts
in health information exchange.24, 25 The lack of interoperability of these systems
dramatically reduces the value that clinicians might gain from using EHRs, which
likely dampens their enthusiasm for adopting such systems.
We found that the inclusion of the Veterans Health Administration (VHA)

hospitals had a dramatic effect on our adoption rate. This result is not surprising.
VHA hospitals have used EHRs for more than a decade and have used these
systems, among other initiatives, to improve the quality of care provided.26, 27
A few other high income countries, such as the United Kingdom, Australia,
New Zealand, and others have also successfully adopted EHR systems, although
most have focused primarily on the ambulatory care sector. We are aware of very
few countries that have made substantial progress in the hospital sector.28
Policy-makers have focused primarily on financially rewarding hospitals for using

HIT through the American Reinvestment and Recovery Act (ARRA), which will
provide financial incentives for hospitals to adopt “meaningful use” EHR systems.
The primacy of financial barriers suggests that these incentives will be helpful for
hospitals, however the definition of “meaningful use” will be critical to the success
of this initiative. Other chapters in this report explain the details of ARRA and
their likely implications for U.S. hospitals.
In summary, we examined levels of EHR adoption in U.S. hospitals in 2008

and found that less than 2 percent of U.S. hospitals have a comprehensive
clinical information system and less than 10 percent have a basic system.
While many institutions reported that they were planning on building out
such systems over the upcoming two years, they faced significant financial
barriers to doing so. The recent passage of ARRA should help alleviate some
of the financial concerns, but other important issues, such as interoperability
and training of HIT support staff will also need to be addressed to realize
widespread use of EHRs across U.S. hospitals.
C hapter 1
Endnotes
1. Blumenthal D, DesRoches CM, Donelan K, et al. Health Information Technology
Foundation, 2006.
2. Blumenthal D and DesRoches CM, eds. Health Information Technology in the
United States: Where We Stand, 2008. Robert Wood Johnson Foundation, 2008.
3. Cutler DM, Feldman NE and Horwitz JR. “U.S. Adoption of
Computerized Physician Order Entry Systems.” Health Affairs (Millwood),
24(6):1654–1663, 2005.
4. Forward Momentum: Hospital Use of Information Technology. Chicago: American
Hospital Association, 2005.
5. Ash JS, Gorman PN, Seshadri V, et al. “Computerized Physician Order Entry
in U.S. Hospitals: Results of a 2002 Survey.” Journal of the American Medical
Informatics Association, 11(2):95–99, 2004.
6. Cutler et al.
7. Laschober M, Maxfield M, Lee M, et al. Hospital Responses to Public Reporting
of Quality Data to CMS: 2005 Survey of Hospitals. Washington, D.C.:
Mathematica Policy Research, Inc., 2005.
8. Cutler, et al.
9. Forward Momentum.
10. Blumenthal et al, 2006.
11. Key Capabilities of an Electronic Health Record System. Washington: Institute of
Medicine, 2003.
12. DesRoches CM, Campbell EG, Rao SR, et al. “Electronic Health Records in
Ambulatory Care—A National Survey of Physicians.” New England Journal of
Medicine, 359(1):50–60, 2008.
14. Jha AK, DesRoches CM, Campbell EG, et al. “Use of Electronic
Health Records in U.S. Hospitals.” New England Journal of Medicine,
360(16):1628–1638, 2009.
16. Jha AK, Ferris TG, Donelan K, et al. “How Common are Electronic Health
Records in the United States? A Summary of the Evidence.” Health Affairs
(Millwood), 25(6):w496–507, 2006.
17. Cutler et al.
18. Ash et al.
19. Forward Momentum.
20. Furukawa MF, Raghu TS, Spaulding TJ, et al. “Adoption of Health
Information Technology for Medication Safety in U.S. Hospitals, 2006.”
Health Affairs (Millwood), 27(3):865–875, 2008.
21. Scott JT, Rundall TG, Vogt TM, et al. “Kaiser Permanente’s Experience of
Implementing an Electronic Medical Record: A Qualitative Study.”
British Medical Journal, 331(7528):1313–1316, 2005.
Chapter 1
22. Simon SR, Kaushal R, Cleary PD, et al. “Correlates of Electronic Health
Record Adoption in Office Practices: A Statewide Survey.” Journal of the
American Medical Informatics Association, 14(1):110–117, 2007.
23. Sequist TD, Cullen T, Hays H, et al. “Implementation and Use of an
Electronic Health Record Within the Indian Health Service.” Journal of the
American Medical Informatics Association, 14(2):191–197, 2007.
24. Adler-Milstein J, McAfee AP, Bates DW, et al. “The State of Regional Health
Information Organizations: Current Activities and Financing.” Health Affairs
(Millwood), 27(1):w60–69, 2008.
25. Adler-Milstein J, Bates DW and Jha AK. “U.S. Regional Health Information
Organizations: Progress and Challenges.” Health Affairs (Millwood),
28(2):483–492, 2009.
26. Jha AK, Perlin JB, Kizer KW, et al. “Effect of the Transformation of the
Veterans Affairs Health Care System on the Quality of Care.” New England
Journal of Medicine, 348(22):2218–2227, 2003.
27. Perlin JB. “Transformation of the U.S. Veterans Health Administration.”
Health Economics, Policy and Law, 1(Pt 2):99–105, 2006.
28. Jha AK, Doolan D, Grandt D, et al. “The Use of Health Information
Technology in Seven Nations.” International Journal of Medical Informatics,
77(12):848–854, 2008.
Chapter 2: Adoption of Electronic Health Records Among Hospitals that
Care for the Poor: Early Evidence of a New Healthcare Digital Divide?
Ashish K. Jha, M.D., M.P.H., Catherine M. DesRoches, Dr.P.H., Eric G. Campbell, Ph.D.,
Alexandra Shields, Ph.D., Paola D. Miralles, B.S., Jie Zheng, Ph.D.,
Sowmya R. Rao, Ph.D., and Sara Rosenbaum, J.D.
Eliminating health disparities remains a priority for policy-makers. Both the

Institute of Medicine and Healthy People 2010 cite the elimination of disparities
as a critical national goal.1, 2 At the same time, there is an intense focus on the
potential for electronic health records (EHRs) to significantly improve care by
enhancing both the safety and effectiveness of health care.3 While there is only
limited empirical evidence of the effect of EHRs in practice, their potential to
improve quality of care is widely recognized.4 This potential has resulted in a
strong focus among policy-makers on monitoring: 1) the rate of adoption of
EHRs among providers serving vulnerable populations; and 2) the potential effect
of this technology on health disparities.5 To the extent that EHRs prove to be
a powerful means of improving care, slower adoption of EHR-enhanced health
care among providers serving vulnerable populations could exacerbate existing
health disparities. Concerns about slower diffusion among this population are
underscored by studies documenting a lag in access to new developments in
clinical care among vulnerable populations.6, 7, 8
The American Recovery and Reinvestment Act (ARRA) of 2009 9 provides

approximately $30 billion to develop a national health information technology
(HIT) infrastructure. ARRA authorizes the use of financial incentives through
Medicare and Medicaid to promote the adoption of EHRs. Recognizing
the importance of health information technology more broadly, and EHRs
specifically, in eliminating health disparities, this act requires the Office of the
National Coordinator for Health Information Technology (ONCHIT) to ensure
that vulnerable populations (i.e., rural communities, the uninsured, and medically
underserved populations) realize the benefit of this technology.10 Although there
is broad support for helping physicians and hospitals implement and use EHRs,
some worry that without a concerted effort to ensure that providers serving
vulnerable populations adopt this technology, this push to digitize health care will
result in a new healthcare “digital divide” as patients from traditionally vulnerable
populations lack access to the benefits of this technology. There is reason to
suggest that this divide would result in lower quality and less efficient care for the
uninsured, and medically underserved racial and ethnic minority populations.
C hapter 2
A central policy question therefore becomes whether the HIT policy reforms set
by ARRA will be implemented in ways that mitigate these risks and increase the
rate of adoption among these providers. However, measuring progress in adoption
among this group presents methodological challenges. One particular challenge is
identifying the group of health care providers that serve poor and other vulnerable
populations. The lack of a clear approach to identifying these providers has made
the measurement of their rate of EHR adoption difficult. In our prior reports,
we documented the lack of methodologically rigorous data on EHR adoption
among providers serving vulnerable populations, 11, 12 showing that many previous
studies documenting low EHR adoption among safety-net providers either lacked
a comparison group, or focused on small geographic areas or community health
centers.13, 14, 15 In this 2009 report, we advance our knowledge in this area by using
nationally representative data on the adoption of EHRs by hospitals serving
vulnerable populations. We use data from the HIT Supplemental Survey (see
Chapter 1 for details of survey methodology) to examine whether there is early
evidence of a “digital divide”.
A Note on Definitional Issues
Defining Safety-Net Hospitals
As discussed in our 2006 report, there are no national data on the proportion
of patients served by a given hospital who are poor.16 After considering several
different methods for specifying safety-net hospitals, we used a hospital’s Medicare
Disproportionate Share Hospital (DSH) Index as a surrogate measure.17 The
DSH Index is assigned to hospitals by the Centers for Medicare and Medicaid
Services (CMS) based on both their fraction of elderly Medicare patients who
also are eligible for Supplemental Security Income (SSI) and the fraction of
non-elderly patients with Medicaid coverage. The index provides an estimate of the
proportion of a given hospital’s patients who are: 1) both elderly and poor (those
eligible for SSI); and 2) non-elderly poor (Medicaid insurance). It is particularly
useful in classifying the proportion of hospitals’ patients that are poor when a large
proportion of patients are elderly. CMS then uses the index to identify hospitals
eligible for additional Medicare payments for caring for the poor. We used the
2007 Impact File compiled by CMS to obtain each organization’s DSH Index.
Hospital Information Technology Survey
Details on the survey development and administration can be found in Chapter

1. Briefly, in partnership with the American Hospital Association (AHA) and our
Expert Consensus Panel (ECP), we developed a new survey of HIT adoption.
The AHA administered the survey as a supplement to their annual survey.
The AHA sent the survey to each hospital’s chief executive officer and asked
the CEO to assign the most knowledgeable person in the institution (generally
the chief information officer or equivalent) to complete the survey. The survey
achieved a response rate of 63.1 percent.
C hapter 2
Defining EHR Adoption
Hospitals were asked to report on the presence of 32 electronic clinical functions.

Specifically, they were asked whether the functions were “fully implemented in all
major clinical units,” “in one or more (but not all) major clinical units,” or “not
yet fully implemented in any unit of the hospital.” Similar to our prior work on
physician adoption of EHRs 18, our ECP used a modified Delphi process to define
a comprehensive EHR as 24 clinical functions implemented across all major
clinical units and a basic EHR as 10 clinical functions implemented in at least one
major clinical unit. Chapter 1 provides additional details on the development of
our definition of an inpatient EHR.
Defining Quality of Care
We used standard quality metrics to define quality of care in the hospital setting.
Specifically, we use data from the September 1, 2008 public release of the Hospital
Quality Alliance (HQA) program. This program reports performance scores for
nearly all acute-care hospitals based on patients seen during calendar year 2007.
We used the HQA process measures to calculate individual hospital summary
performance scores for four conditions: acute myocardial infarction (AMI) (eight
process measures), congestive heart failure (CHF) (four measures), pneumonia
(seven measures), and surgical complication prevention (five measures). We used a
widely-deployed approach to create condition-specific summary scores.19
Key Findings
Safety-Net Hospitals
We first examined characteristics of hospitals based on the quartile of DSH Index.

We found, not surprisingly, that hospitals in the highest quartile of DSH Index
(“High-DSH”), when compared to low-DSH hospitals, cared for a substantially
higher proportion of Medicaid patients (27% versus 9%), elderly Black patients
(18% versus 4%) and elderly Hispanic patients (4% versus 1%). High-DSH
hospitals also cared for a substantially lower proportion of Medicare patients
(40% versus 53%) than low-DHS hospitals. These high-DSH hospitals were more
likely to be large (19% versus 5%), major teaching hospitals (15% versus 3%),
located in the South (56% versus 26%) and for-profit. Hospital characteristics
are displayed in Table 1.
C hapter 2
Table 1: Hospital Characteristics by DSH Index Among Responders to the HIT Survey
Highest DSH 2nd DSH 3rd DSH Lowest DSH

P-value
Quartile Quartile Quartile Quartile

Patient Population (Mean) (%)
Proportion of Medicare patients 40 47 49 53 <0.001
Proportion of Medicaid patients 27 19 15 9 <0.001
Proportion Black 18 7 5 4 <0.001
Proportion Hispanic 4 1 1 1 <0.001
Structural Characteristics (Mean) (%)
Small (0–99) 29 30 36 39
Hospital Size Medium (100–399) 51 59 54 55 <0.001
Large (400+) 20 11 9 5
Teaching Hospital 15 7 5 3 <0.001
Northeast 10 15 17 22
Geographic Midwest 9 9 37 38
<0.001
Region South 56 50 32 26
West 25 18 14 14
For-profit 24 17 12 14
Profit status Private nonprofit 50 62 71 74 <0.001
Public 26 21 18 12
Urban Location 83 83 81 83 0.66
Source: Jha AK, DesRoches CM, Shields A, et al. “The Adoption of Electronic Health Records Among Hospitals that Care for the Poor: Early Evidence of a New Healthcare
Digital Divide?” Health Affairs, http://content.healthaffairs.org/cgi/reprint/28/6/w1160.
Rates of EHR Adoption
We first examined rates of overall EHR adoption across quartiles of the DSH
Index. Because the adoption rates of comprehensive EHRs were so low across all
hospitals,20 we combined basic and comprehensive EHRs. We assessed associations
between EHRs and the DHS Index using bivariate and multivariate analyses.
All multivariate analyses control for key hospital characteristics, including size,
teaching status, region, profit status, and location (urban versus rural). Our adjusted
(multivariable analysis) and unadjusted (bivariate analysis) adoption rates were not
significantly different. For brevity, we present only the bivariate results in
this chapter.
We found small, non-significant differences between high-DSH and low-DSH

Index hospitals: high-DSH hospitals had slightly lower rates of adoption of either
the basic or comprehensive EHR compared to low-DSH hospitals (9.7% versus
11.5%) (Table 2).
C hapter 2
Table 2: Selected Electronic Functionalities and Their Level of Implementation in DSH Index Responders
Highest DSH 2nd Highest 3rd Highest Lowest DSH

Clinical Functionality P-value
Quartile DSH Quartile DSH Quartile Quartile
Electronic Clinical Documentation % % % %
Demographic characteristics 87 88 88 92 0.045
Medication lists 62 66 71 74 <0.001
Nursing assessments 57 64 67 67 0.003
Physician notes 26 27 31 33 0.03
Problem lists 41 50 52 51 0.001
Discharge summaries 60 64 72 69 0.001
Advanced directives 40 51 54 53 <0.001
Results Viewing
Diagnostic test images (e.g., EKG tracing) 44 53 58 57 <0.001
Diagnostic test results (e.g., Echo report) 63 69 70 71 0.02
Lab reports 87 91 92 90 0.04
Radiology images 77 87 85 85 <0.001
Radiology reports 89 91 91 90 0.55
Consultant reports 59 64 69 68 0.009
Laboratory tests 32 29 32 35 0.20
Radiologic tests 33 30 32 35 0.37
Medications 29 26 29 32 0.27
Consultation requests 25 24 26 27 0.73
Nursing orders 32 30 33 33 0.71
Decision Support
Clinical guidelines (e.g., ß-blockers post-MI) 27 29 32 30 0.47
Clinical reminders (e.g., Pneumovax) 35 40 37 40 0.17
Drug allergy alerts 63 67 71 69 0.11
Drug-drug interaction alerts 63 68 70 70 0.09
Drug-lab interaction alerts 49 57 57 54 0.05
Drug dosing support (e.g., renal dose

46 52 54 52 0.07
guidance)
Bar Coding
Medication administration 27 38 37 41 <0.001
C hapter 2
Rates of Adoption of Key Clinical Functionalities
We next examined differences in the implementation of key clinical functions and

found several small, consistent differences in implementation between high-DSH
Index and low-DSH Index Hospitals (Figure 1). We conducted this analysis for two
reasons. First, the low level of EHR adoption overall likely limited the power of
our analysis to find differences in adoption between high- and low-DSH hospitals.
Second, understanding differences in the adoption of specific functions is critical
in the development of policies that will effectively increase the HIT capacity of the
health care system in the future. Our analytic plan was similar to the one described
above, with the adoption of each specific functionality modeled as the dependent
variable and the DSH Index as the primary independent variable, controlling for
hospital characteristics. Again, we present only the bivariate analyses.
We found significant difference between high- and low-DSH hospitals in the

areas of electronic clinical documentation and results viewing. Overall, high-DSH
hospitals had lower rates of adoption of all 24 functions compared to low-DSH
hospitals, although many of these differences did not reach statistical significance.
Statistically significant differences included lower rates of electronic medication
lists (62% in high-DSH hospitals versus 74% among low-DSH hospitals) and
electronic discharge summaries (40% versus 53% respectively).
Figure 1: Rate of Adoption of EHRs by U.S. Hospitals, 2008
25.0%
Comprehensive EHR
Basic EHR
20.0%
15.0%
9.0%
10.0% 8.2% 7.9% 8.4%
5.0%
2.5%
1.5% 1.5% 1.7%
0%
Highest DSH 2nd Highest DSH 3rd Highest DSH Lowest DSH
Quartile Quartile Quartile Quartile
Source: Jha AK, DesRoches CM, Shields A, et al. “The Adoption of Electronic Health Records among Hospitals that Care for the Poor: Early Evidence of a New Healthcare
Digital Divide?.” Health Affairs, http://content.healthaffairs.org/cgi/reprint/28/6/w1160.
C hapter 2
Quality of Care and EHR Adoption
A key question in the debate around EHR adoption is whether EHR systems can
help eliminate disparities by allowing providers of poor patients to provide higher
quality care. The notion here is that while there are generally known disparities
in the quality of care provided by those who serve the poor and those who do
not, some have proffered that EHR systems can help eliminate the gap. The
design of our hospital survey allowed us to link our survey data on EHR adoption
with the standard hospital quality metrics described above to examine whether
the adoption of EHR systems would impact the quality of care for providers
with a high proportion of poor patients. We first assessed whether there was an
association between a high DSH Index and lower quality scores (to test whether
there were disparities in care), then stratified these results by adopters and non-
adopters of EHRs (to test if EHRs can help eliminate these disparities). In this
case, the effect modification analysis tested whether the relationship between the
DSH Index and quality of care was affected by the presence of a comprehensive or
basic EHR. Conducting the stratified analysis allowed us to examine whether the
relationship between the proportion of poor patients in a hospital and the quality
of care provided varied by EHR status.
We found a highly statistically significant relationship between proportion of

poor patients in a given hospital and all four conditions examined: a 10 percent
increase in DSH Index was associated with a 0.5 percent lower performance on
AMI quality metrics, 1 percent lower performance on CHF metrics, 0.9 percent
lower performance on pneumonia metrics, and 1.5 percent lower performance
on surgical complication prevention metrics. These results confirmed that there
are important disparities in hospital care in the national sample of hospitals
(Table 3).
Table 3: The Relationship Between DSH Index and Quality of Care, Stratified by EHR Adoption
Interaction
Quality of Care Adoption of EHRs No Adoption of EHRs Term
(P-value)*
Estimate Estimate Estimate
P-value P-value P-value
(95% CI) (95% CI) (95% CI)
Acute MI -0.5 0.7 -0.7 -0.5

<0.001 0.01 <0.001
Summary Score (-0.6 to -0.4) (0.1 to 1.2) (-0.9 to -0.5) (p-value 0.02)
CHF Summary -1.0 0.5 -0.5 -0.4

<0.001 0.39 0.038
Score (-1.2 to -0.7) (-0.7 to 1.7) (-1.0 to -0.03) (p-value 0.35)
Pneumonia -0.9 0.6 -0.6 -0.5

<0.001 0.06 <0.001
Summary Score (-1.1 to -0.8) (-0.02 to 1.3) (-0.8 to -0.4) (p-value 0.04)
Surgical Care -1.5 0.3 -1.0 -0.7

<0.001 0.48 <0.001
Summary Score (-1.7 to -1.3) (-0.6 to 1.2) (-1.3 to -0.6) (p-value 0.05)
Overall -0.7 0.9 -0.7 -0.4

<0.001 0.004 <0.001
Summary Score (-0.8 to -0.6) (0.3 to 1.5) (-1.0 to -0.4) (p-value 0.05)
Estimate represents a 10% change in Disproportionate Share Hospital (DSH) Index.

*P-value ≥ 0.1 is traditionally considered statistically significant for interaction tests.
C hapter 2
Figure 2: Major Barriers to HIT Adoption Among DSH Hospitals with No EHR
Barriers to EHR Adoption by DSH Quartile

90%
80%
Highest DSH Quartile
2nd Highest DSH Quartile
70%
3rd Highest DSH Quartile
Lowest DSH Quartile

60%
50%
40%
30%
20%
10%
0%
Capital to Concerns About Cost of Resistance Concerns About
Purchase EHR Return on Maintenance from Physician Lack of Future
Investment Support
Barriers
Source: Jha AK, DesRoches CM, Shields A, et al. “The Adoption of Electronic Health Records Among Hospitals that Care for the Poor: Early Evidence of a New
Healthcare Digital Divide?” Health Affairs, http://content.healthaffairs.org/cgi/reprint/28/6/w1160.
Our effect modification analysis demonstrated a very consistent pattern.

In hospitals with an EHR (basic or comprehensive), DSH Index was not
negatively associated with quality performance (i.e., among EHR adopters,
there were no disparities based on proportion of poor patients cared for).
However, among non-EHR adopters, a higher DSH Index was associated with
lower quality performance for three of the four conditions examined: acute
myocardial infarction, pneumonia, and surgical care (i.e., the disparities
persisted among the non-EHR adopters). When we tested for interactions,
examining whether the relationship between DSH Index and quality score
varies by EHR status, we found a statistically significant interaction for these
three conditions (Table 3).
Barriers to and Incentives for EHR Adoption
Understanding the specific barriers faced by safety-net hospitals will be critically

important to any efforts to spur adoption among this group of providers. Toward
this end, we examined associations between barriers to and facilitators of EHR
adoption and the proportion of poor patients served by a given hospital. First
we identified the five barriers and facilitators most frequently cited among all
C hapter 2
respondents as major barriers. We then examined the rate with which they were
cited by hospitals that disproportionately care for the poor. We then built logistic-
regression models (adjusting for the hospital characteristics mentioned above) to
assess whether the proportion of poor patients was associated with respondents’
reports of specific barriers and facilitators.
Among those hospitals without a comprehensive or basic EHR system, high-DSH

hospitals were more likely than low-DHS hospitals to cite inadequate capital
(77% versus 63%) and future support (21% versus 16%) as major barriers to
adoption. Across levels of DSH Index scores, hospitals reported concerns about
the other four main barriers at comparable rates (Figure 2). Regardless of DSH
Index score, the majority of hospitals identified financial incentives as likely to
have a major positive impact on EHR adoption. There were no differences in
facilitators identified by high- and low-DSH hospitals (data not shown).
Discussion
As policy-makers examine methods to improve the quality and effectiveness

of the health care system, they have increasingly turned to HIT as a critical
piece of the solution. There have been hundreds of studies demonstrating a
relationship between the effective implementation and use of specific, individual
IT functionalities and improved quality of care.21, 22 Studies of EHR adoption have
also found associations with adoption and increased efficiencies, and safer, less
expensive health care.23, 24, 25, 26
Medicare and Medicaid under ARRA will afford financial incentive provisions
for EHR and HIT adoption, and will have important implications for hospitals
that care for a disproportionate share of poor patients. These hospitals, with
fewer Medicare patients, will be primarily reliant on the adoption funds that state
Medicaid programs are able to produce. As a result, the Medicaid HIT adoption
incentives, which are available to both children’s hospitals and hospitals whose
inpatients are more than 10 percent Medicaid, become an especially relevant
policy consideration. Furthermore, unlike Medicare, the Medicaid HIT incentive
provisions 27 not only reward meaningful use but also are available to finance the
front end costs associated with adoption and upgrades, thereby helping high-DSH
hospitals overcome their more limited access to capital.28
Implementation of Medicaid HIT incentives is not mandatory for state

participation in the Medicaid program. Therefore, it is unclear whether the
Medicaid reforms will actually spur adoption at high-DSH hospitals. Rather,
states can pursue HIT adoption at their option. Thus, strong implementation of
Medicaid HIT incentives depends on the extent to which states aggressively move
toward reform. Although Medicaid provider incentive payments will qualify for
100 percent federal financing, states will incur 10 percent of the costs related to
administration. This, of course, raises the question of how rapidly cash-strapped
Medicaid programs, particularly those not already actively pursuing HIT, will
move toward adoption. Federal funding for incentives does not begin until 2011;
thus much depends on the extent to which ONCHIT and CMS are able to foster
state Medicaid adoption through technical assistance support and funding under
the other HIT provisions of the act, as well as the extent to which they can set
Medicaid implementation policies that encourage more rapid state action.
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Another important factor will be how Medicare and state Medicaid programs
define the concept of meaningful use, the measure used under the ARRA to
determine if hospitals and health professionals qualify for reward payments once
technology is adopted. ONCHIT and CMS are now grappling with this issue
and in this regard, an important finding to emerge from this study is the modest
differences between high- and low-DSH hospital adopters. This finding suggests
that the problem is partly a meaningful use lag between high- and low-DSH
adopters but partly also a question of how to position high-DSH hospitals so
that adoption becomes financially viable.
Although relatively few hospitals have a comprehensive EHR, a large proportion

of hospitals do have key functions that comprise EHR systems, including
results viewing, medication and problem lists, and demographics. Given that
hospitals that disproportionately care for the poor lag in adoption of many of
these functions (for reasons we cannot determine other than perhaps cost), it
will be critical to track the progress of these institutions and ensure that funding,
especially via Medicaid or the DSH mechanism, is robust for the providers
at these hospitals. Further, given that high-DSH Index hospitals seem to be a
heterogeneous group (some are nonprofit academic medical centers while others
appear to be smaller, for-profit institutions), they may need differing approaches
to spur HIT adoption. Failure to do so may lead to greater financial strains for
these institutions and may widen gaps in the quality of care delivered.
We found differences in quality between the high- and low-DSH Index hospitals
in the national sample, as well as among non-EHR adopters. However, we found
no such relationship among hospitals that had adopted EHR systems. While
it is tempting to conclude that EHRs helped to erase the quality performance
difference between high- and low-DSH index hospitals, we cannot be sure.
Other studies indicate that EHR adoption is not associated with improvements
in quality, suggesting that improved quality outcomes may be driven by how
effectively health professionals actually use EHR systems for improvement.29, 30
These studies have bolstered efforts to ensure that “meaningful use” leads to
better care and not just having EHR systems implemented.
In summary, we examined associations between the adoption of EHR

systems and/or key clinical components of these systems by hospitals that
disproportionately care for the poor and those that do not. Hospitals serving
a higher proportion of poor patients were less likely to have adopted many
key electronic functionalities. Our results also indicate that comprehensive or
basic EHRs may be helpful in reducing the disparities in quality of care between
high- and low- DSH Index hospitals. While the Obama administration and
Congress seek to craft policies to effectively spend resources to stimulate health
information technology, it will be critical to ensure that those institutions that
care for the most vulnerable Americans are not left behind.
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Endnotes
1. U.S. Department of Health and Human Services. Healthy People 2010.
Available at www.healthypeople.gov/Publications.
2. 2. Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care.
Washington: Institute of Medicine (IOM), 2001.
3. Office of the National Coordinator for Health Information Technology
(ONCHIT). Mission. Available at www.healthit.hhs.gov/portal/server.pt
4. Chaudhry B, Wang J, Wu S, et al. “Systematic Review: Impact of Health
Information Technology on Quality, Efficiency, and Costs of Medical Care.”
Annals of Internal Medicine, 144(10):742–752, 2006.
5. Chang BL, Bakken S, Brown SS, et al. “Bridging the Digital Divide: Reaching
Vulnerable Populations.” Journal of the American Medical Informatics Association,
11(6):448–457, 2004.
6. Sambamoorthi U, Moynihan PJ, McSpiritt E, et al. “Use of Protease
Inhibitors and Non-Nucleoside Reverse Transcriptase Inhibitors Among
Medicaid Beneficiaries with AIDS.” American Journal of Public Health,
91(9):1274–1481, 2001.
7. Groeneveld PW, Laufer SB, Garber AM. “Technology Diffusion, Hospital
Variation, and Racial Disparities Among Elderly Medicare Beneficiaries
1989–2000.” Medical Care, 43(4):320–329, 2005.
8. Ferris TG, Kuhlthau K, Ausiello J, et al. “Are Minority Children the Last
to Benefit From a New Technology? Technology Diffusion and Inhaled
Corticosteroids for Asthma.” Medical Care, 44(1):81–86, 2006.
9. P.L. 111-5 (111th Cong., 1st sess.).
10. P.L. 111-5 (111th Cong., 1st sess.).
11. Blumenthal D, DesRoches CM, Donelan K, et al. Health Information Technology
Foundation, 2006.
12. Blumenthal D and DesRoches CM (eds.) Health Information Technology in the
United States: Where We Stand, 2008. Robert Wood Johnson Foundation, 2008.
13. Jha AK, Ferris TG, Donelan K, et al. “How Common are Electronic Health
Records in the United States? A Summary of the Evidence.” Health Affairs
(Millwood), 25(6):w496–507, 2006.
14. Shields AE, Shin P, Leu MG, et al. “Adoption of Health Information
Technology in Community Health Centers: Results of a National Survey.”
Health Affairs (Millwood), 26(5):1373–1383, 2007.
15. Hing E and Burt CW. “Are There Patient Disparities When Electronic Health
Records are Adopted?” Journal of Health Care Poor for the Poor and Underserved,
20(2);473–488, 2009.
16. Blumenthal and DesRoches.
17. Centers for Medicare and Medicaid Services (CMS). Disproportionate Share
Hospital (DSH). Available at www.cms.hhs.gov/acuteinpatientpps/05_dsh.asp.
18. Blumenthal et al.
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19. Jha AK, Orav EJ, Dobson A, et al. “Measuring Efficiency: The Association
of Hospital Costs and Quality of Care.” Health Affairs (Millwood),
28(3):897–906, 2009.
20. Jha AK, Desroches CM, Campbell EG, et al. “Use of Electronic Health
Records in U.S. Hospitals.” New England Journal of Medicine,
360:1628–1638, 2009.
21. Chaudry, et al.
22. Goldzweig CL, Towfigh A, Maglione M, et al. “Costs and Benefits of Health
Information Technology: New Trends From the Literature.” Health Affairs
(Millwood), 28(2):w282–93, 2009.
23. Hillestad R, Bigelow J, Bower A, et al. “Can Electronic Medical Record
Systems Transform Health Care? Potential Health Benefits, Savings, and
Costs.” Health Affairs (Millwood), 24(5):1103–1117, 2005.
24. Bu D, Pan E, Walker J, et al. “Benefits of Information Technology-Enabled
Diabetes Management.” Diabetes Care, 30(5):1137–1142, 2007.
25. Kuperman GJ and Gibson RF. “Computer Physician Order Entry: Benefits,
Costs, and Issues.” Health Affairs (Millwood), 139(1):31–39, 2003.
26. Shekelle PG, Morton SC, Keeler EB. Costs and Benefits of Health Information
Technology. Washington: Agency for Healthcare Research and Quality, U.S.
Department of Health and Human Services, 2006.
27. Section 1903(t) of the Social Security Act as added by Section 4201 of ARRA,
P.L. 111-5.
28. National Governors Association (NGA). State Opportunities Under the American
Recovery and Reinvestment Act: Health Information Technology (Title XIII), 2009.
29. National Governors Association.
30. Linder JA, Ma J, Bates DW, et al. “Electronic Health Record Use and the
Quality of Ambulatory Care in the United States.” Archives of Internal
Medicine, 67(13):1400–1405, 2007.
Chapter 3: State Roles in the Advancement of Health
Information Technology
Steffanie J. Bristol, B.S., Paola D. Miralles, B.S.
Introduction
State governments play a unique role in the U.S. health care system. They
regulate the insurance market within the state, license clinicians and facilities,
ensure legal protections for consumers, and act as a purchaser and funder of
health care services through Medicaid and other public insurance programs.1
As a purchaser and funder of health care services, state governments are keenly
aware of the increasing costs of health care. The issue of rising costs has come
into sharp focus recently as states face the worst fiscal conditions in decades.2
State governments reported a collective budget shortfall of $230 billion between

2009 and 2011, forcing more than three-quarters of state governments to enact
budget cuts.3 These fiscal challenges are projected to persist for the next four to
five years. Yet, shrinking budgets are also compelling states to consider methods
to control health care expenditure growth. Health care costs commonly consume
approximately 25 percent of state budgets; Medicaid alone is projected to
account for an average of 21 percent of state expenditures in 2010.4 Increased
demand for health safety-net programs, such as state Childrens Health Insurance
Programs (SCHIP) and Medicaid, compounded with lower actual revenues
among community health centers, are likely to exacerbate expenditures issues.
As states have worked to contain the growth of health care costs, health information
technology (HIT) has become a priority on many state policy agendas as a tool to
improve quality of care, reduce inefficiencies, and control costs. Nearly all 50 states
and the District of Columbia are involved in HIT initiatives.5
The American Recovery and Reinvestment Act (ARRA) offers unprecedented

resources for the widespread adoption of HIT, many of which are directed
toward state governments. As part of the ARRA, hospitals and clinicians who
care for a disproportionate share of low-income, non-elderly patients (i.e.,
pediatric hospitals, critical access hospitals, clinicians practicing in Federally
Qualified Health Centers) will be eligible for financial incentives for HIT
adoption through their state’s Medicaid program. States will be eligible for
planning and implementation grants that will, among other things, promote
the use of EHRs for quality improvement, identify and promote strategies for
HIT adoption in medically underserved communities, and encourage electronic
exchange of health information.6 States may apply for competitive grants to
develop loan programs to purchase EHRs, train clinicians, and enhance electronic
health information exchanges. Finally, the Office of the National Coordinator for
Health Information Technology (ONCHIT) has announced the establishment
of the State Health Information Exchange Cooperative Agreement Program to
“advance appropriate and secure health information exchange (HIE) across the
health care system”.7
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As noted above, prior to the ARRA, many states were actively engaged in efforts
to foster widespread adoption of HIT, although the stage of development, scope
of work, overseeing agency, and primary funding mechanism vary widely. In this
chapter, we review these state level initiatives focused on HIT adoption more
broadly. In addition, given the emphasis that ONCHIT has placed on state level
health information exchange, we provide an overview of state efforts to encourage
HIE at the state and local level.
Overview of State-Level Activity on HIT
Legislative efforts by states have grown rapidly since 2004, when President
George W. Bush called for comprehensive adoption of interoperable electronic
health records (EHRs) by 2014.8 Between 2005 and 2008 a total of 168 pieces
of HIT-related legislation were passed by state governments.9 The Health
Information Technology Economic and Clinical Health Act (HITECH) of the
ARRA, which provides nearly $30 billion to build a national HIT infrastructure,
will provide unprecedented opportunities for states to effectively expand HIT
efforts through grant, loan, and financial assistance programs (please refer to
Chapter 4: Recent Federal Initiatives in Health Information Technology for detailed
information about ARRA).10 This infusion of new dollars makes it critical for
states to integrate and coordinate their efforts with those of federal and local
governments and other public and private organizations to realize the potential
of HIT and achieve comprehensive, interoperable expansion. Table 1 reviews
current areas of focus for health technology adoption.
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Table 1: HIT Activities at the State Level
E-Health Category States Indicating Category as Significant
Alaska, Ark., Ariz., Calif., Colo., Conn., Del., Washington,

D.C., Ga., Iowa, Ill., Ky., La., Md., Mich., Nev., Neb., N.H.,
Electronic HIE development
Ohio, Okla., Ore., Pa., R.I., S.D., Tenn., Texas, Vt., Wash.,
Wis., W.Va.
Grants, loans and other technical assistance for HIT and local HIEs Fla., Ga., Ky., Mich., Minn., Wash.
Telehealth Hawaii, Neb., N.M., Ore., W. Va.
E-prescribing Ark., Ill., Mass., N.H., Pa., R.I., Ky.,
Replacement information system N.D.
Electronic medical records (EMRs) Fla., Hawaii, N.M., Ore., R.I.
Electronic health records (EHRs) Ark., Washington, D.C., Kan., Minn., Mo.
Patient health records (PHRs) Ore.
Decision-support tools, chronic disease management and case

Maine, Mo., Ind., Vt.
management
Web-based tools for eligibility, program benefits, provider billing, etc. Ala., Mass., Utah
Quality and transparency activities Ala., Ark, Calif., Ga., Va.
Registries Maine , Ohio , Utah
Privacy and security issues Calif., Conn., La., Md., Okla., Wis.
Source: Commonwealth and National Governor’s Association E-Health Survey, 2007.
Although general state HIT approaches range from a regulatory to a market-oriented

approach, state HIT legislation typically falls into one of five major categories:
1. Planning and Oversight
2. Advancing Adoption and Implementation
3. Funding
4. Privacy Protection and Security
5. Health Information Exchange (HIE)
In this chapter of our report, we examine these five areas of state focus, providing
an overview of the steps that states have taken to advance the use of HIT.
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Planning and Oversight
Successful implementation of effective HIT begins with careful planning and

oversight. In the following section, we review the roles that many states have
taken in promoting HIT adoption and implementation.
Several states have established planning committees. These groups develop a

single plan for HIT adoption and implementation, along with the promotion
of agreed upon software standards and e-health terminology. These committees
or task forces also serve as neutral settings for public, private, and consumer
representatives to share insights about different perspectives and experiences.
Although planning requires sufficient funding and thoughtful organization,
savings may be realized downstream as a result of stronger, more efficient
strategic outcomes.11
State HIT initiatives are often overseen by one or more of the following state
departments or offices: 12
■■ State department of health
■■ Other state department/agency
■■ Governor’s office
■■ State Medicaid program
■■ Commissioned state-wide panel, appointed by governor or state legislature
■■ State department focused on information technology
Specific committee tasks and deliverables are normally defined by legislation and
may include the following: 13
■■ Establishing an inventory of existing projects
■■ Detailing future needs and resources
■■ Devising recommendations for state policy changes to promote HIT
■■ Developing a statewide roadmap
■■ Creating sustainable business model recommendations
■■ Addressing privacy and security concerns
It is important to note that states will face a number of challenges unique to

HIT during the planning phase. For example, state infrastructure to support HIT
must consider existing users of these technologies and build on existing state
laws. Further, older systems often lack the capability to either extend their current
use of functionalities or are incompatible with emerging technologies. In addition
planning bodies must anticipate issues at varying levels of implementation and
forecast technical assistance and educational needs for sustainability. Overcoming
these obstacles through careful planning is essential. Finally, state planning
committees must be cognizant of the need to maintain open communication
with federal representatives to ensure state input is well represented and
appropriately considered during the federal policymaking process. Under
HITECH, existing adoption plans should be evaluated in the broader context
of new federal initiatives.14
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Advancing Adoption and Implementation
Our previous research demonstrates the overall low levels of HIT adoption nationally
among ambulatory physicians and acute-care hospitals.15, 16 States are ambitiously
exploring various strategies and collaborating within and across state lines to
encourage best practices for HIT adoption. The National Governors Association
Center for Best Practices (NGA) underscores such efforts. In 2007, the center
established the State Alliance for eHealth (State Alliance) as a collaborative state-level
initiative comprised of elected and appointed representatives to aid the transformation
of health care connectivity and address interstate and intrastate implementation
challenges. The initiative is organized into several task forces that are focused on
examining select issues such as health information protection, health care practice,
health information and data exchange, and public programs implementation.17
State experiences provide key insights for emerging technologies and national
policies, making them a common target for federally funded demonstrations and
pilots aimed at testing strategies for HIT implementation. Medicaid, employee
health benefit plans, state hospital and psychiatric facilities, prisons, and public
health initiatives are all venues for direct participation in state HIT initiatives.
The following state policy levers and incentives can drive adoption by directly
influencing standards and establishing legal parameters for future
implementation efforts.
Mandates, Executive Orders and Legislation: Legislation serves as a tool for state policy-
makers to directly affect action and promote collaboration. State commissions
and task forces commonly focus their efforts on developing strategic roadmaps for
HIT implementation. Other state initiatives nest HIT and HIE implementation
within the broader context for health care reform and quality improvements. Some,
such as Massachusetts and Minnesota, mandate state agencies to use Certification
Commission for Healthcare Information Technology (CCHIT) certified products
in attempts to increase standards-driven integrative systems within their borders.
Table 2 highlights enacted legislation from the last two years.18
Table 2: 2007 and 2008 Enacted Legislation
Number of
Main Topic States*
Laws Enacted
Comprehensive 7 6
E-prescribing 14 12
Electronic records 10 8
Financing 46 25
Health information exchange 11 10
Miscellaneous 9 7
Planning/study commissions 18 14
Privacy and security 5 5
Resolutions 12 9
Total 132 45
Source: National Conference of State Legislatures, August 2008.

*Includes District of Columbia.
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Health Organization and Physician Licensure Standards: States may soon begin to
tie EHR adoption and specific EHR functionalities to standards for licensure
renewals for both hospital and community health centers. In an effort to
promote computerized physician order entry, the Massachusetts Department of
Public Health will require CCHIT certified CPOE by 2012 and EHRs by 2015.
Furthermore, Massachusetts is preparing to include a predetermined physician
board licensure requirement for HIT competency.19
Training: To realize the full benefits of HIT implementation, states should

prioritize efforts to implement robust training programs for clinicians and other
technology users. States can ensure the dissemination of technical guidance and
education to all participants. The eHealth Initiative suggests several methods
for states to engage clinicians and advance HIE involvement such as: hospital
outreach, physician practice visits, and outreach through medical societies.20
Infrastructure Development: The development of necessary technical infrastructures

will directly affect the rate of adoption. Support exists for conducting statewide
assessments to determine levels of adoption as a measure to move forward and
to gauge progress over time, and some states have supported the development
of uniform assessment tools.21
State-Level Consensus Projects and Collaborations: There are several state-level projects
initiated by stakeholders other than state governments. For example, the State
Level HIE Consensus Project began as a contract under ONCHIT to explore
venues for dissemination of HIT technologies.22 The Rural Health Resource
Center for Health Information Technology strives to improve rural health care by
providing a national knowledge base for HIT implementation focused on rural
areas.23 In 2006, the state of Connecticut launched eHealthConnecticut, a health
records network allowing providers to share information electronically. This entity
offers HIT and interoperability support for the entire state. Efforts are transparent
to secure the trust of all participants.24
Incentive Programs: To advance HIT, some states offer medical school loan
repayments linked to IT competency for specialties with workforce shortages and
provide tax credits and further financial incentives discussed later in the chapter.
As part of a workforce loan repayment program, Massachusetts assists medical
school loan repayment for practitioners who are willing to work in underserved
areas and includes HIT competency as a prerequisite (Massachusetts SB 2863).
State Medicaid programs will provide incentive payments for adopters who
demonstrate meaningful use of systems starting in 2011 and will invoke penalties
for non-adopters in the beginning in 2015 (please refer to Chapter 4 for detailed
information). As discussed in Chapter 2, states will have an important role in this
incentive structure as hospitals with a low proportion of Medicare patients (i.e.,
safety-net hospitals, pediatric hospitals) will rely on incentives made available
through state Medicaid programs.
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Consumer Engagement: In prior reports, we discussed the importance of consumers

in efforts to increase HIT adoption.25 In their role of increasing communication
across a varied selection of stakeholders, states may extend discussions to include
consumer perspectives. Focus groups have commonly been used as a way to
understand consumer perspectives on HIT adoption. State programs have also
sought to increase consumer engagement through outreach coordination and
partnerships with privacy advocates.26 In addition, states are being encouraged
to directly engage consumers through the promotion of HIT systems such as
personal health records (PHRs). Minnesota created a pilot program to provide
consumer-owned portable PHRs to members of the state employee plan
(Minnesota HB 548) and Oregon identified PHRs as one of their most
significant e-health activities.27
State Purchasing Power: As promoters of HIT, states can leverage their pooled
purchasing power and roles as health care providers to increase adoption.
As such, they are able to negotiate price discounts for items which include
HIT systems, training resources, and software.28
Funding
The development of effective, interoperable HIT infrastructures will require

significant investment. Funding is the barrier to HIT adoption and implementation
most commonly cited not only by providers and hospitals, but also by state
governments hoping to actively promote its use.29-31 The limited ability of
cash-strapped states to provide substantial upfront and ongoing funding
emphasizes the need for legislators to explore alternate methods of providing
resources outside of state budgets.
To date, the majority of states have not provided direct funds to HIT efforts.
For states that did fund HIT initiatives, the amounts greatly varied: from less than
$100,000 per year to more than $100 million per year.32 These funds are typically
allocated to providers who are less likely to adopt EHR systems, such as small
practices, rural health providers, community health centers, and providers who
serve a disproportionate share of poor and minority patients. In the following
section we discuss the possible policy funding options that states might use to
increase adoption.
Dedicated Funding Streams: Dedicated funding streams may be created by placing

a fee on a health care service, such as a claims processing fee, or through dues and
bonds. The state may charge a fee to all users of HIT systems or require vendors
to pay a tax on sold products.
Appropriations: Stretching state health dollars to fund more long-term HIT efforts
may prove difficult. It generally has been noted that state legislators pass one-time
appropriations for specific HIT initiatives or projects. Project examples include
technical support to community health centers during adoption, the purchase of
EHR systems or software updates, or funding planning committee administrative
expenses over a specified time frame.33
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Grants or Loans: Commonly, states will administer grants or loans to promote

adoption among targeted providers who encounter additional financial barriers
to the purchase and implementation of HIT systems.34 These providers typically
practice in small practices or care for a large proportion of poor or underserved
patients, such as community health centers. States may require organizations
that receive funds to meet specific requirements or match state funding
appropriations. States most frequently provide grants for upfront costs, such
as equipment and training.35
Provider Reimbursement Incentives: States may choose to provide supplemental

reimbursements to providers for HIT related activities, such as participation in
health information exchange or meaningful use of EHR systems. In New York,
payments have been made to providers with certain electronic records capabilities
and defined percentages of Medicaid or uninsured patients.36
Tax Credits: States may award tax credits to providers who adopt HIT. Since 2007,
Wisconsin has allowed tax credits up to 50 percent of the cost of an electronic
medical record (EMR) up to $10 million. (SB 40)
Pay for Performance Initiatives: Policy-makers are increasingly interested in tying

financial incentives to performance measures (see Chapter 5 for a discussion of the
effect of EHRs on the public reporting of quality data). States may include quality
measures specific to HIT tools, such as the use of CPOE to decrease adverse drug
events and medication errors, as part of pay-for-performance programs. States
may include such provisions in pay-for-performance programs through Medicaid,
state health benefit plans, or in state mental hospital or prison systems. Although
current incentives do exist through Medicaid, the relatively weak incentives have
been unable to promote adoption.37
Health IT Funds: Health IT funds are typically appropriated by legislatures.

These dedicated funds are intended for the sole purpose of increasing technology
adoption. The public funds are often pooled with payments from the private
sector (which may be voluntary contributions or required payments, such as
claims fees). To ensure effective use of the funds, policy-makers often tie
requirements to funding, such as the use of a certified EHR system. Based on
their calculations, states can expect to set certain monetary goals which aid
adoption, such as among independent small practitioners. For example, Vermont
has allocated 100 percent of a health IT fund (established in their department
of treasury) for the advancement of HIT and utilization within the state.38
Maryland
In August 2009, the state of Maryland approved $10 million in start-up

funding for a statewide health information exchange. The funds will be used
over two to five years, and come from hospital reimbursement adjustments.
The nonprofit Chesapeake Regional Information Systems for our Patients
(CRISP) was selected by the Maryland Health Care Commission, which is
the state agency responsible for the development and implementation of a
statewide HIT, to build the exchange.39
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Privacy Protection and Security
State legislatures increasingly have played a role in addressing privacy and security
concerns both as means to protect consumer and provider information, and
to develop trust among participating HIT entities. In addition to protecting
sensitive health information and ensuring the secure exchange of data, effective
privacy and security laws should reduce variations in standards and protocols
among participating entities. Although functions such as audit logs and access
controls can arguably create safer electronic health information than paper-
based data, there are substantial fears of misuse.40 All states need to evaluate their
legal environment and determine the most appropriate set of actions to address
inconsistencies among federal, state, and local privacy laws, and how various
stakeholders interpret and apply the laws. Below we review the range of approaches
currently being used by state governments to allay these concerns.
Considerations in Structuring Policy for Patient Consent: Fundamental patient security

questions are exposed when states consider whether patient consent is required
to enter health data into a HIT system. Some states, such as Rhode Island,
require patients to opt-in for their data to be included in HIT systems. Others
automatically include data for all patients in HIT systems or restrict data entry
to specific providers, except under emergency situations.41
Consent to Access Data: Patients may be allowed to choose which providers are able
to access their data. Most states also include special conditions in which patient
data may be accessed by nonselected providers, such as emergency care personnel
or public health authorities.
Data Breach Notifications: To manage patient concerns of inappropriate or

unauthorized access to personal health information (PHI), states may expand
existing data breach notification laws to include medical information. These
laws require organizations to promptly notify patients in the event that PHI is
compromised.
Redefining Health Care Providers: Innovative new technologies like PHRs are
spurring the entrance of novel vendors, such as Google and Microsoft, into
the health care industry. States may need to consider expanding the definition
of health care providers regulated under HIPAA to include unconventional
organizations involved with patient data.
Limitations on Commercial Use of Data: Many states are actively pursuing

mechanisms to limit the commercial use of PHI. A general consensus exists
regarding the importance of aggregated patient-level data for quality measurement
and population health management. As such, emerging concerns of potential
abuse by commercial entities and the purchasing of unidentified patient data have
been identified.42
HIPAA: The electronic transmission of data facilitated by HIE infrastructures

may compel states to consider granting HIPAA preemptive authority over more
stringent state laws.43
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Audit: States may require HIT systems to maintain an audit log that tracks the
identity of all providers who access the patient’s data and/or the date on which
the information was accessed. States can grant patients the right to obtain a copy
of the audit log at any time.
Penalties: The violation of state privacy and security statutes may evoke civil or
criminal penalties. Further, those who inappropriately access or disclose patient
health information may be liable for compensatory damages, attorney fees, or
disciplinary action by state licensure boards.44
Optimal consumer engagement in HIT will require transparent strategies that

ensure the protection and security of sensitive PHI while instilling a high degree
of confidence. States play a pivotal role in designing an environment that promotes
data security, accountability, and confidence while harmonizing inconsistent federal,
state, and local laws. Although laws that govern privacy and security may exist for
a paper-based system, these laws may need to be retooled for an electronic-based
system. States may also need to consider updating and modifying existing statutes
to appropriately reflect the changing technological environment in the health care
industry, maximize compliance, and accommodate shifting public concerns.
Health Information Security and Privacy Collaboration (HISPC)
In June 2006, ONCHIT awarded RTI International a contract to address

security and privacy concerns related to differences in state laws and business
policies. The multi-state collaboration, which has grown from 34 to 42
states and territories, aims to promote the exchange of health information
by reviewing variations in laws and policies and developing solutions and
implementation plans to overcome these barriers.45
Massachusetts Security Breach Law
The Massachusetts security breach law is the most stringent legislation in

the nation on how personal information is handled across states. Under the
law, the attorney general and the Office of Consumer Affairs and Business
Regulation must be notified of a security breach or unauthorized use of
personal information of Massachusetts residents. The notification must
include: “(1) a detailed description of the nature and circumstances of
the breach of security or unauthorized acquisition or use of personal
information; (2) the number of Massachusetts residents affected as of the
time of notification; (3) the steps already taken relative to the incident;
(4) any steps intended to be taken relative to the incident subsequent to
notification; and (5) information regarding whether law enforcement is
investigating the incident.” 46
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Health Information Exchange
Prior to 2005, state government involvement in HIE was limited and efforts to
create electronic data exchange were primarily focused on stakeholder-led regional
health information organizations (RHIOs). As discussed in our 2008 report,
many of these organizations were unable to find financially sustainable models
and suffered from other issues related to infrastructure capacity and regulatory
limitations.47 However, with EHRs and HIE increasingly identified as critical to
health system reform, state governments’ interest and involvement in developing
sustainable HIE has grown. HIE is recognized as a critical strategy to achieve
higher performance, reduce inefficiencies, and improve health outcomes. Health
care savings associated with HIE implementation are projected to be substantial:
approximately $77.8 billion annually (2003 dollars) after a 10-year implementation
period on the national level.48 Savings are predominately accrued by decreasing
redundant tests and reducing the administrative burden of paper-based exchanges
that promote substantial wasteful spending.49
Several key provisions in the ARRA are focused on catalyzing action among states
to plan and build these infrastructures.50 The majority of funding allocated by the
ARRA for the planning, implementation, and oversight of HIE will lie with states,
providing states with an unprecedented opportunity to lead HIE efforts.51
Current State of HIE
The sixth annual eHealth Initiative’s survey to assess the state of HIE found
rapidly increasing interest in and progress toward HIE activities at the state
level. The report identified 193 HIE initiatives in 2009, of which 57 are
operational and exchanging data, in all 50 states and the District of Columbia
(Figure 1). Of the 150 HIEs that responded to the survey, 83 initiatives in 43
states reported involvement by one or more state agencies, most commonly
the state’s department of health.52
Champions for HIE advancement within states may consist of the state
government itself, the private sector, a state designated independent entity, or
a combination of private and public resources. Small states tend to establish
one HIE, whereas larger states typically create multiple HIEs to serve their
populations. Select states have also collaborated with other states due to
geographic proximity or because their citizens are frequent users of health
care services in another state.53
To date, the majority of efforts at the state-level are focused on: 1) governance
to convene and coordinate efforts; and 2) technical operations to develop the
necessary infrastructure and support services.
C hapter 3
Figure 1: HIE Initiatives Across the U.S.
States with Operational HIE Initiatives
Number of Operational Initiatives:
None One Two or more
Source: eHealth Initiative 2009 HIE Survey
Governance
Convene Stakeholders: The experiences of the most successful states suggest

that a full range of stakeholders must be actively engaged during planning,
implementation, and maintenance processes for HIE to have an optimal impact.
State governments can serve as a neutral environment for competing organizations
to foster shared responsibility, trust, and investment by public and private entities.
Coordinate Efforts With National, Regional and Local Initiatives: In order to avoid
duplicative efforts states must allineate current and developing agendas
at the national, regional, and local levels to reduce administrative redundancies,
optimize coordination between participating entities, and ensure HIE aims are
aligned with broader state and federal health goals. States may best do this by
designating one entity, whether new or existing, to coordinate HIT initiatives
among various stakeholders.
Identify Barriers: Each participating entity will face obstacles to HIE involvement.
Leading endeavors to identify and understand barriers, as well as to develop
plans to overcome these barriers, is crucial to implementation and long-term
sustainability.
Advance Standardization and Interoperability: Several mechanisms exist through

which states can promote standardization and interoperability. For example, they
may require the purchase of certified systems that meet specific standards criteria.
C hapter 3
They may also mandate that EHR systems sold within their borders or used by
state agencies include specific functionalities. In future years, states will have the
opportunity to adopt federal standards that are currently being developed by the
Health Information Technology Standards Committee. (See Chaper 4.)
Manage Privacy and Security Concerns: States have addressed privacy and security
legal barriers by creating state privacy and security boards, developing approaches
to consent, and managing differing state and federal privacy laws. This is discussed
previously in the chapter.
Promote Transparency Through Advocacy and Education: States may advocate for
transparent HIE adoption in private and public settings. They may also provide
education programs, fund studies or reports that assess the implications of HIE
efforts, communicate information to the public, and facilitate consumer involvement.
Technical Operations
Fund HIE Infrastructure: States may fund demonstration or pilot projects, provide
grants or loans to providers for the purchase of EHR systems and other software
to transmit and receive data, support ongoing training and maintenance expenses,
and provide broadband access to participant entities. Since the majority of states
have not developed robust exchange infrastructures, these funds will provide the
foundation for the sharing and exchange of clinical data.
The states are an ideal resource for advancing HIE as they may play a number of
pivotal roles, such as purchaser, regulator, coordinator, and planner. Yet, the wide
variety of strategies underscores a lack of information about the best and most
appropriate means to advance HIE at the state level. States are seeking increased
guidance from the federal government for technical standards for interoperable
systems, training and educational resources, implementation and support funding,
and recommended models for infrastructure and investment.54
Colorado Regional Health Information Organization (CORHIO)
The Colorado Regional Health Information Organization (CORHIO) is

a nonprofit organization created in 2007 to lower costs and improve the
quality and efficiency of care in the region. The CORHIO provides
real-time patient data to providers at participating organizations when a
patient presents in the emergency room, including prescription drugs,
lab tests, diagnosis, and registration information. It was launched through
a contract with the Agency for Healthcare Research and Quality (AHRQ).
Additional funds have been provided by: the State of Colorado; the
Colorado Health Foundation; the Children’s Hospital; Denver Health
and Hospital Authority; Kaiser Permanente Colorado; the University of
Colorado Hospital; United Healthcare; Rocky Mountain Health Plans;
and COPIC Insurance. The diverse partnership of public and private
stakeholders, including governments, health plans, providers, consumers,
hospitals, nursing homes, pharmacies, and quality experts, and use of
national standards and local knowledge has created a robust infrastructure
supported by the community.55
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Challenges
States face a number of substantial challenges to achieving comprehensive

adoption of interoperable HIT.
State Finances: States must balance constrained budgets with the potential
for HIT to accumulate substantial long-term cost savings. HIT implementation
and maintenance expenses are large, savings are not immediately realized, and
benefits are difficult to quantify. State governments are experiencing deep fiscal
troubles, and growth trends indicate that current rates of state health care spending
are unsustainable. Further, states’ limited budgets are rarely able to fund long-term
operations that provide HIT with a critical financial backbone.
Misaligned Financial Incentives: It is difficult to make the business case and obtain
organizational buy-in from an array of stakeholders due to misaligned financial
incentives. Providers typically endure the majority of financial burden for HIT
systems while payors tend to reap the financial benefits of HIT adoption and use.
The most appropriate strategy to balance the costs and benefits among participating
stakeholders is currently unclear.
Interoperability: Different vendors and software are frequently incompatible. The

dearth of uniform technical standards impedes the flow of clinical and administrative
data among various organizations. Further, standards are not consistently applied
across all participating entities, or within a given organization.
Stakeholder Engagement: States must employ strategies to obtain trust, buy-in, and
participation among a full range of stakeholders with competing interests and
market pressures.
Privacy and Security Concerns: Privacy and security concerns are present among
both consumers and providers. Consumers fear that their data will be breached and
misused. Providers are concerned that they may be liable for the misuse of data, such
as treating a patient based on incomplete data. In addition, differing federal and state
laws and organizational rules can create confusion and varying interpretations of the
law that lead to practice and legal discordance among organizations.
Conclusion
State governors and legislators across the country are increasingly interested in
employing HIT as a tool to manage rising state health care expenditures and
improve their population’s health. As regulators, purchasers, providers, payers,
and public health advocates, states are uniquely positioned to promote the
adoption and implementation of interoperable HIT. As a result, legislation
activity around HIT at the state level has experienced rapid growth. However,
states are faced with substantial budgetary challenges in the midst of the
economic downturn. The ability for states to balance budget constraints and
effectively engage in HIT efforts is unclear. Thus, it will be pivotal for states
to maximize the funding opportunities presented by the ARRA and facilitate
involvement of both public and private stakeholders. The adoption of HIT
systems alone will not ensure the quality and efficiency gains predicted by
health care experts and policy-makers. Governors and legislators must carefully
consider activities to create robust infrastructures that balance finances, protect and
engage consumers, and promote the meaningful use of interoperable systems.
C hapter 3
Endnotes
1. National Governors Association. Available at www.nga.org/portal/site/nga/

menuitem.b14a675ba7f89cf9e8ebb856a11010a0. Accessed on October 5, 2009.
2. National Governors Association and the National Association of State Budget

Officers. The Fiscal Survey of States, 2009.
3. NGA and State Budget Officers.
4. NGA and State Budget Officers.
5. eHealth Initiative. Migrating Towards Meaningful Use: The State of Health

Information Exchange, 2009.
6. Rural Health Resource Center. Rural Health Information Technology. Available

at www.ruralhit.org. Accessed on October 3, 2009.
7. U.S. Department of Health and Human Services. State Health Information

Exchange Cooperative Agreement Program. Available at http://healthit.hhs.gov/
portal/server.pt?open=512&objID=1336&mode=2&cached=true. Accessed on
October 1, 2009.
8. George W. Bush, A New Generation of American Innovation, 2004.
9. National Conference of State Legislatures (NCSL). Health Information

Technology and States: A Project Report from NCSL’s Health Information Technology
Champions, 2009.
10. P.L. 111-5 (111th Cong., 1st Session).
11. Congressional Budget Office (CBO). Evidence on the Costs and Benefits of Health
Information Technology, 2008.
12. eHealth Initiative.
13. NCSL Champions.
14. The State Alliance for E-health. Preparing to Implement HITECH: A State Guide
for Electronic Health Information Exchange, 2009.
Medicine, 359(1): 50-60, 2008.
16. Jha AK, DesRoches CM, Campbell EG, et al. “Use of Electronic Health
360(16):1628–1638, 2009.
17. Members of the Public Programs Implementation Taskforce. Report from the
Public Programs Implementation Taskforce to the State Alliance for E-Health, 2008.
18. National Conference of State Legislatures (NCSL). Health Information Technology:

2007 and 2008 State Legislation, 2008.
C hapter 3
19. The State Alliance for e-Health (State Alliance). Accelerating Progress: Using
Health Information Technology and Electronic Health Information Exchange to
Improve Care, 2008.
20. eHealth Initiative, 2009
21. Smith VK, Gifford K, Kramer S, et al. State E-Health Activities in 2007: Findings
From a State Survey, 2008.
22. State Level HIE Consensus Project. Available at www.slhie.org/index.asp.

Accessed on October 1, 2009.
23. Rural Health Resource Center.
24. eHealth Connecticut. Available at www.ehealthconnecticut.org. Accessed on

October 1, 2009.
25. Blumenthal D and DesRoches CM. Health Information Technology in the United
States, 2008: Where We Stand. Robert Wood Johnson Foundation, 2008.
26. Smith et al.
27. Smith et al.
28. Smith et al.
29. DesRoches et al.
30. Jha et al.
31. Smith et al.
32. Smith et al.
33. NCSL Champions.
34. Smith et al.
35. NCSL Champions.
36. NCSL Champions.
37. CBO.
38. National Conference of State Legislatures. Health Information Technology:

2007 and 2008 State Legislation, 2008.
39. Chesapeake Regional Information Systems for our Patients. $10 Million in
Startup Funding Approved for Maryland Health Information Exchange, 2009.
40. Hersh W. “Health Care Information Technology: Progress and Barriers.”

Journal of the American Medical Association, 292 (18):2273–2274, 2004.
41. NCSL Champions.
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42. Safran C, Bloomrosen M, Hammond WE, et al. “Toward a National Framework

for the Scondary use of Health Data: an American Medical Informatics
Association White Paper.” Journal of the American Medical Informatics Association,
14(1):1-9, 2007.
43. NCSL Champions.
44. NCSL Champions.
45. The Health Information Security and Privacy Collaboration (HISPC). Available
at http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&cached=true&objI
D=1240. Accessed on September 15, 2009.
46. Office of Consumer Affairs and Business Regulations, Commonwealth of

Massachusetts. Requirements for Security Breach Notifications Under Chapter 93H.
Available at www.mass.gov/?pageID=ocaterminal&L=3&L0=Home&L1=Busi
ness&L2=Identity+Theft&sid=Eoca&b=terminalcontent&f=idtheft_notification_
reqs&csid=Eoca. Accessed on September 14, 2009.
47. The State Alliance for E-Health. Accelerating Progress: Using Health Information
Technology and Electronic Health Information Exchange to Improve Care, 2008.
48. Walker J, Pan E, Johnston D, et al. “The Value of Health Care Information
Exchange and Interoperability.” Health Affairs (Project Hope) Supply Web
Exclusives, W5-10–W5-18.
49. Walker et al.
50. National Governors Association Center for Best Practices. State Opportunities
Under the American Recovery and Reinvestment Act: Health Information Technology
(Title XIII), 2009.
51. U.S. Department of Health and Human Services. State Health Information
Exchange Cooperative Agreement Program. Available at http://healthit.hhs.gov/
portal/server.pt?open=512&objID=1336&mode=2&cached=true. Accessed on
(October 1, 2009).
52. eHealth Initiative.
53. Smith et al.
54. State Alliance, 2008.
55. Colorado Regional Health Information Organization. Available at

www.corhio.org. Accessed on September 15, 2009.
Chapter 4: Recent Federal Initiatives in Health Information Technology
Melissa M. Goldstein, J.D., Lee Repasch, M.A., and Sara Rosenbaum, J.D.
Introduction
Over the past five years, federal policy-makers have supported the increased use
of health information technology (HIT) through executive orders,1 regulatory
reforms,2 and legislation in recognition of its potential to decrease costs, improve
health outcomes, coordinate care, and improve public health.3 In April 2004,
President Bush called for the widespread adoption of interoperable electronic
health records (EHRs) by 2014, and issued an executive order setting in motion
the development of technology standards and adoption incentives and requiring
federal agencies to develop and execute a strategic plan to guide the nationwide
adoption of interoperable HIT in both the public and private sectors.4 The
strategic plan, issued by the administration in 2008, established a four-year
implementation timeframe and is structured around two goals: patient-focused
health care and population health, each containing four specific objectives:
privacy and security, interoperability, adoption, and collaborative governance.5
Hundreds of pieces of legislation addressing one or more aspects of health

information have been introduced in Congress since President Bush’s 2004
announcement, culminating in the February 2009 passage of the American
Recovery and Reinvestment Act of 2009 (ARRA).6 ARRA supports the
development, adoption, and upgrade of HIT both structurally and economically
by authorizing new federal investments in HIT capability and use in accordance
with the development of comprehensive federal standards. The act both
incentivizes EHR adoption among physicians and hospitals and establishes a
formal policymaking framework to support the development of a nationwide
technology infrastructure that will enable the electronic use and accurate
exchange of health information.7
The American Recovery and Reinvestment Act of 2009
One of the most comprehensive pieces of economic legislation ever enacted,

ARRA provides hundreds of billions of dollars in heath care spending, including
more than $49 billion in discretionary appropriations and mandatory spending
to support and promote the adoption of HIT generally and EHRs in particular.8
In addition, the legislation makes comprehensive reforms in health law and
policy, particularly in the areas of health information privacy law and laws
governing provider payment under Medicare and Medicaid.9 To create a
national policy basis for HIT, ARRA authorizes the Health Information
Technology for Economic and Clinical Health (HITECH) Act,10 which creates
the Office of the National Coordinator for Health Information Technology
(ONCHIT) and provides for its support through the ongoing appropriations
process. Prior to HITECH, ONCHIT existed as a result of a 2004 executive
order; under ARRA, the national coordinator is empowered to engage in
administration-wide direction of federal investments in HIT.11
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HITECH contains four key elements: HIT infrastructure and new program
development; a federal policy and standards framework; Medicare and Medicaid
payment incentives; and privacy reforms.
Health IT Infrastructure and New Program Development
ARRA appropriates $2 billion to support a series of grants, loans, and technical

assistance programs designed to aid providers with the adoption of EHRs and
to encourage health information exchange (HIE) at the state, regional, and
local levels.12 One particular provision creates a national HIT Research Center
and Regional Extension Centers to assist providers in adopting, implementing,
and using EHRs. The goal of the extension centers is to provide assistance and
education to all providers in a region, but assistance will be prioritized first to
public, nonprofit and critical access hospitals; federally qualified health centers
(FQHCs); rural or other providers that serve uninsured, underinsured or
medically underserved patients; and individual or small group practices. They
are thereby likely to be extremely important to small and rural health care
providers, who often require more assistance than providers in large practices
to implement and use EHR systems successfully.13
The U.S. Department of Health and Human Services (HHS) has significant
discretion in allocating the funding among various programs. As required by the
law, ONCHIT submitted an initial operating plan outlining immediate actions
for meeting the act’s statutory requirements to Congress in May 2009 (Figure 1).14
Figure 1: ONCHIT Operating Plan Highlights
Outlines immediate plans to meet statutory requirements under HITECH

aimed at improving the health of Americans and the performance of the
nation’s health system, through investment in HIT.
Funding $2 billion
Privacy and security $24.3 million*
NIST $20.0 million
Regional HIT exchange $300.0 million
Unspecified $1655.7 million
Goals
Inform health care professionals
Improve population health
* Included an estimated $9.5 million for audits by the Office of Civil Rights, CMS, and is subject to change.
Continued
C hapter 4
Figure 1: ONCHIT Operating Plan Highlights, Cont.
Major Activities of the Plan Include:
Privacy and Security Spend Plan. The Department of Health and Human Services (HHS) is to fulfill HITECH regulatory and
enforcement requirements, which enhance enforcement of the Health Insurance Portability and Accountability Act (HIPAA) Privacy
and Security Rules and add new requirements of covered entities and business associates. The HHS’ duties include providing
contract assistance, issuing regulations and guidance, conducting studies, submitting Congressional reports, and issuing guidance
on safe harbor provided by the statute’s notification of breach provision. Milestones include issuing regulations that:
Revise penalty structure (February 18, 2010)

Implement provisions for sharing civil monetary penalties or settlements with harmed
• HIPAA Enforcement Rule
individuals (February 18, 2012)
Implement willful neglect provisions (August 18, 2010)
• HIPAA Security Rule Extend certain provisions to business associates (February 18, 2010)
Extend certain provisions to business associates (February 18, 2010)
Modify provisions concerning the right to request restrictions on disclosure; interpretation of

“minimum necessary” requirement; and access to electronic health records (EHRs) (February
18, 2010)
• HIPAA Privacy Rule Modify provisions concerning marketing and fundraising (February 18, 2010)
Modify accounting of disclosures provisions (June 18, 2010)
Modify to generally prohibit payment for personal health information (PHI) without individual
authorization (August 18, 2010)
Issuing interim requirements for breach notification for covered entities and business
associates
Issuing regulations to clarify that certain entities are business associates

• Other HHS Duties Include:
Issuing guidance on the HIPAA Privacy Rule’s requirements for de-identification
Reporting to Congress on “breaches for which notice was provided to the Secretary” and
HIPAA Privacy and Security Compliance.
National Institute of Standards and Technology (NIST):
Providing funding for continued work on advancing health care information integration through activities such as technical standards
analysis and establishment of conformance testing infrastructure.
Standards Rulemaking:
HHS to adopt and publish an initial set of standards, implementation specifications, and certification criteria. (Published in Federal
Register by December 31, 2009.)
Update Federal HIT Strategic Plan (Publish by December 31, 2009)
Define “Meaningful Use” of an EHR
Recovery Act Public Communications:
Establish mechanisms for communications with the public, which would include creating a Web site like healthreform.gov.
ONCHIT is charged with revising and developing additional performance measures that support the programs funded with ARRA
dollars. Measures are to be tied to goals and objectives of the Federal Health IT Strategic Plan.
C hapter 4
Federal Policy and Standards Framework
ARRA creates a new federal HIT policy and standards framework, with ONCHIT
at its center. The law empowers the national coordinator to lead strategic planning,
oversee the development of technology standards and policy (although it is the
HHS Office for Civil Rights that will have immediate responsibility for privacy
reforms, in keeping with its current privacy law oversight powers), and establish
the governance system and standards that will undergird national infrastructure
oversight. ONCHIT and the secretary of HHS have broad authority under the
law to tie federal dollars to specific policies and standards developed to promote
the broad policy objective of designing, building, operating and governing a
nationwide health information structure.
As discussed in Chapter 5 of this report, many issues are left open, however,
including which standards and technologies will be specified, and the specific
governance structure, administrative requirements, and contractual rules that
will be developed to oversee the nationwide health information infrastructure.15
Advisory Committees
ARRA establishes two federal advisory committees to advise the national

coordinator. As shown in Figure 2, the HIT Policy Committee is charged with
making recommendations regarding the implementation of a nationwide HIT
infrastructure, including implementation of the federal strategic plan. In addition,
the Policy Committee’s duties include making recommendations in areas such
as technologies that protect the privacy and security of health information; the
steps necessary to ensure utilization of electronic health information to improve
the quality of health care; and technologies and design features that address the
needs of children and other vulnerable populations. The Policy Committee will
also recommend an order of priority for the development, harmonization and
recognition of standards, implementation specifications and certification criteria
for the electronic exchange and use of health information.16
Figure 2: HIT Policy and Standards Committees
HIT Standards Committee is charged with making recommendations to the National Coordinator on standards,
implementation specifications, and certification criteria for the electronic exchange and use of health information.
•D
evelop, harmonize or recognize standards, implementation specifications and certification criteria, consistent with the latest
recommendations made by the HIT Policy Committee.
•P
rovide for the pilot testing of standards and implementation specifications by NIST.
• Assure consistency with existing standards.
• Serve as a forum to bring broad groups of stakeholders together.
• Establish a schedule for assessment of recommendations of HIT Policy Committee, not later than 90 days after enactment and
update schedule annually.
• Conduct public hearings and solicit public input.
• Consider recommendations and comments from the National Committee on Vital and Health Statistics (NCVHS) in the
development of standards.
Source: ARRA § 13101 (adding new Title XXX section 3003 to the Public Health Service Act [42 U.S.C. § 201 et seq.]), 42 U.S.C.A. § 300jj-13
(West, Westlaw through August 2009).
Continued
C hapter 4
Figure 2: HIT Policy and Standards Committees, Cont.
HIT Policy Committee is charged with making policy recommendations to the National Coordinator on a policy framework for
the development and implementation of a nationwide health information technology infrastructure, including implementation of the
strategic plan. The committee will recommend areas in which standards, implementation specifications, and certification criteria are
needed for the electronic exchange and use of health information and will also recommend an order of priority for the development,
harmonization, and recognition of such standards. The standards and implementation specifications shall include named standards,
architectures, and software schemes for the authentication and security of individually identifiable health information and other
information as needed to ensure the reproducible development of common solutions across disparate entities.
Required Recommendations:
• Privacy and security technology including technology for the segmentation and protection from disclosure of specific and sensitive
individually identifiable health information.
• A nationwide technology infrastructure that allows for electronic use and accurate exchange of health information.
• Technologies that allow individually identifiable health information to be rendered unusable, unreadable, or indecipherable to
unauthorized individuals.
• Use of EHRs by all Americans by 2014.
• Technologies that can account for disclosures by covered entities under HIPAA for purposes of treatment, payment and health
care operations.
• The use of certified EHRs to improve the quality of care through coordination, continuity, reduction of medical errors, improving
population health, reducing population disparities, reducing chronic disease, and advancing research and education.
• Use of electronic systems to ensure the comprehensive collection of patient demographic data, including, at a minimum, race,
ethnicity, primary language and gender information.
• Technologies that address the needs of children and other vulnerable populations.
Other Areas for Recommendations:
• The appropriate uses of a nationwide health information infrastructure, for the purposes of collection of quality data and public
reporting, public health and biosurveillance, medical and clinical research, and drug safety. Various specialized technologies,
including telemedicine, self service, home health care, medical error reduction, care continuity, meeting the needs of diverse
populations, and any other technology that the HIT Policy Committee finds to be among the technologies with the greatest
potential to improve the quality and efficiency of health care.
• Methods to facilitate secure access by an individual to the individual’s PHI.
• Methods, guidelines, and safeguards to facilitate secure access to patient information by a family member, caregiver or guardian
acting on behalf of the patient.
Source: ARRA § 13101 (adding new Title XXX § 3002 to the Public Health Service Act [42 U.S.C. § 201 et seq.]), 42 U.S.C.A. § 300jj-12 (West, Westlaw through August 2009).
Whereas the HIT Policy Committee will set priorities for standards development,
the HIT Standards Committee will recommend which standards are to be
adopted, consistent with the strategic plan and the Policy Committee’s
recommendations.17 An initial set of standards must be adopted by the secretary
by December 31, 2009.18 While adoption of the standards by private entities is
entirely voluntary, federal agencies that contract with health care providers,
health plans, and health insurance issuers must require contractors to use
compliant HIT systems and products where available as they implement,
acquire, or upgrade HIT systems and products.19
C hapter 4
Medicare and Medicaid Payment Incentives
ARRA employs both “carrots and sticks” to encourage the adoption and use of
HIT. It authorizes the Centers for Medicare and Medicaid Services (CMS) to
provide monetary incentives to qualified health care providers under Medicare
and Medicaid to encourage the purchase and use of EHRs, and threatens financial
penalties in the form of reduced Medicare payments for nonadopters. Incentive
payments are conditioned on the ability of adopters to demonstrate “meaningful
use” of EHRs, defined by the statute (subject to further regulation) in regard to
Medicare payments as: (1) use of certified EHR technology in a demonstrably
meaningful manner, including e-prescribing; (2) use of certified EHR technology
that allows for the electronic exchange of health information to improve the
quality of health care, such as promoting care coordination; and (3) reporting on
clinical quality and other measures selected by the secretary using certified EHR
technology.20 The act specifically requires the secretary to seek to improve the use
of EHRs and to improve health care quality over time by requiring more stringent
measures of meaningful use.21 ARRA gives state Medicaid agencies flexibility
to develop a definition of meaningful use that may differ from that used by
Medicare. All state definitions must be approved by the secretary of HHS, must
address populations in the state with unique needs, such as children, and must
be compatible with state or federal administration management systems.22
The ability of providers to benefit from either proposed incentive program

depends heavily on the creation of viable HIE networks at the state, regional,
and local levels, as meaningful use of an EHR depends in part on the exchange of
information across different health care providers. The incentive systems therefore
rely not only on the government’s development of the definition of meaningful
use, but also on state action to facilitate health information exchange. HHS has
stated that it will publish a proposed rule on the definition of meaningful use in
late 2009. Both the HIT Policy Committee and the HIT Standards Committee
have provided recommendations to help CMS develop the initial criteria for
meaningful use and assist in planning for any expansion of the criteria for the
incentives programs in the future.23 Please see Chapter 5 of this report for further
discussion of this issue.
Medicare
ARRA’s Medicare incentive payments are targeted at physicians practicing in

fee-for-service settings, hospitals, and, in certain cases, Medicare Advantage
(MA) organizations. Physicians are eligible for the incentive payments without
regard to their Medicare patient load, except in the case of those practicing in
MA organizations. As shown in Table 3, beginning in 2011, physicians who can
demonstrate meaningful use of a certified EHR can receive bonus Medicare
payments for up to five years. The payment is equal to an additional 75 percent
of the physician’s allowable Medicare charges for the given year, subject to caps.24
Physicians who predominately serve beneficiaries in health professional shortage
areas (HPSAs) are eligible for 10 percent higher payment caps.25 Beginning in
2015, physicians who are not meaningful users of EHRs will be penalized in the
form of reduced Medicare fees at the rate of 1 percent per year. The secretary
retains authority to reduce Medicare payments by a total of 5 percent if fewer
than 75 percent of providers are meaningful EHR users by 2018.26
C hapter 4
A similar incentive system is established for eligible acute care and critical access
hospitals, with payments beginning in 2011 and phasing down by 25 percent a
year over four years. Reduced incentive payments are available for hospitals that
become meaningful users in 2013 or 2014, but unavailable for new adopters after
2015. Beginning in 2015, hospitals face penalties for non-adoption in the form of
reduced reimbursements.27
Table 3: Medicare Incentive Payments for Adoption and Meaningful Use of Certified EHR
First Payment Year Amount, and Subsequent Payment Reduction in Fee Schedule for
Adoption Year
Amounts in Following Years (in thousands of dollars) Non-Adoption/Use
2011 $18, $12, $8, $4, $2 $0
2012 $18, $12, $8, $4, $2 $0
2013 $15, $12, $8, $4 $0
2014 $12, $8, $4 $0
2015 $0 -1% of Medicare fee schedule
2016 $0 -2% of Medicare fee schedule
2017 and following $0 -3% of Medicare fee schedule
Incentive: Eligible providers may receive up to 75% of allowable Medicare Part B charges, to a maximum of $18,000 over a five-
year period, ending in 2016.
• Physicians practicing in rural health professional shortage areas are eligible to receive a 10% increase on the incentive payment
amounts described above.
• For 2018 and each subsequent year, if the proportion of eligible professionals who are meaningful EHR users is less than 75%,
the reduction in fee schedule will be lowered by 1% from the applicable percent in the preceding year, up to 5%.
• Eligible acute care and critical access hospitals have a similar incentive plan beginning in 2011 and phasing down over four
years, available to new adopters only through 2015. Penalties for non-adoption begin in 2016. The incentive payment is
calculated based on the product of: (1) an initial amount of $2 million plus an amount based on the number of discharges for
each eligible hospital; (2) an adjustment variable reflecting the proportion of the hospital’s inpatient-bed days attributable to
Medicare beneficiaries and an adjustment for charity and uncompensated care; and (3) a transition factor which phases down
the incentive payments by 25% per year over the four-year period (i.e., one for the first payment year, ¾ for the second payment
year, ½ for the third payment year, ¼ for the fourth payment year, and zero thereafter).
• Qualifying critical access hospitals can apply for cost-based reimbursement for EHR technology capped at 101% of reasonable
costs. In addition, 20 percentage points are added to the Medicare share portion of the incentive formula, provided that the
Medicare share calculation does not exceed 100%. Instead of the annual or periodic payments in place for other hospitals,
critical access hospitals may expense the costs in a single payment year. These hospitals can continue to receive cost-plus
reimbursement for remaining costs, such as ongoing maintenance of the EHR systems.
Eligible Physicians: Non-hospital based physicians. Medicare Advantage-affiliated professionals are eligible if affiliated with
organizations that furnish at least 80% of their services to MA enrollees; and furnish, on average, at least 20 hours per week of
patient care services.
• Physicians cannot take advantage of the incentive payment programs under both the Medicare and Medicaid programs.
Source: American Medical Association at www.ama-assn.org/ama1/pub/upload/mm/399/arra-hit-provisions.pdf; CMS; ARRA Title IV Subtitle B § 4102 (a) (adding new
section 1886 (n)(2) to the Social Security Act).
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Medicaid
ARRA gives a dramatic and explicit boost to state funding efforts for HIT under
Medicaid. The law provides for a 100 percent federal contribution to enable EHR
adoption by several classes of Medicaid providers 28 who serve a high volume of
Medicaid patients, and, in the case of Federally Qualified Health Centers (FQHC)
and rural health clinics, “needy” patients. Eligible providers must agree to waive any
right to Medicare HIT incentive payments.29
The Medicaid incentive program makes financing available for implementation or

technology upgrades to providers who might not have funds of their own to invest.30
Following an initial start-up payment, subsequent payments are conditioned on
meaningful use of the EHR technology as defined by each individual state. While
the secretary of HHS is obligated to implement the Medicare HIT incentives set
by ARRA, Medicaid implementation is an optional state undertaking.
As shown in Table 4, in order to qualify for the Medicaid incentive payments, a

provider’s patient load must be at least 30 percent Medicaid; providers practicing
“predominately” in rural health clinic or FQHC settings are accorded broader
eligibility criteria that allow payment if at least 30 percent of their patient volume
Table 4: Medicaid Incentive Payments for Adoption and Meaningful Use of Certified EHR
(in thousands of dollars)
Adoption
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total
Year
2011 $21.5 $8.5 $8.5 $8.5 $8.5 $8.5 $0 $0 $0 $0 $0 $63,750
2012 $21.5 $8.5 $8.5 $8.5 $8.5 $8.5 $0 $0 $0 $0 $63,750
2013 $21.5 $8.5 $8.5 $8.5 $8.5 $8.5 $0 $0 $0 $63,750
2014 $21.5 $8.5 $8.5 $8.5 $8.5 $8.5 $0 $0 $63,750
2015 $21.5 $8.5 $8.5 $8.5 $8.5 $8.5 $0 $63,750
2016 $21.5 $8.5 $8.5 $8.5 $8.5 $8.5 $63,750
Incentive: Eligible professionals may receive up to 85% of the net average allowable costs for certified EHR technology, including
support and training (determined on the basis of studies that the secretary will undertake), up to a maximum level of $25,000 for the
first year and $10,000 for each subsequent year, over a six-year period.
• After the initial start-up payment, subsequent payments are conditioned on “meaningful use” of EHR.
• Non-hospital based pediatricians with at least 20% patient volume attributable to Medicaid can receive a reduced incentive
payment per year, totalling up to $42,500 over a six-year period.
• Other non-hospital based physicians with at least 30% patient volume attributable to Medicaid, and eligible professionals who
practice predominantly in a FQHC or RHC and have at least 30% patient volume attributable to needy individuals (including
Medicaid, SCHIP, those paying on sliding scale basis, uncompensated care), could receive up to $63,750 over a six-year period.
• Acute care and hospitals with at least 10% patient volume attributable to Medicaid would also be eligible for payments, as would
children’s hospitals of any Medicaid patient volume.
Eligible Providers: Physicians, dentists, certified nurse-midwives, nurse practitioners and physician assistants who are practicing in
Federally Qualified Health Centers (FQHCs) or Rural Health Clinics (RHCs) led by a physician assistant.
• Physicians cannot take advantage of the incentive payment programs under both the Medicare and Medicaid programs.
Source: CMS; ARRA Title IV Subtitle B § 4201(a) (amending Section 1903 of the Social Security Act, 42 U.S.C.A. § 1396b.)
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are “needy individuals,” (which includes Medicaid, State Children’s Health

Insurance Program [SCHIP]) beneficiaries, and those receiving uncompensated
care or paying on a sliding scale basis).31 Pediatricians can qualify for a reduced
incentive payment if 20 percent of their patients are Medicaid beneficiaries.32
As with the Medicare incentive program, Medicaid incentives begin in 2011 and
are provided on a phased-down basis. Eligible providers may receive up to 85
percent of net average allowable costs, up to a maximum level of $25,000 for the
first year and $10,000 for each subsequent year. An initial payment to cover the
cost of purchasing or upgrading certified technology including training and other
support services can therefore equal up to $21,250. Eligible providers may then
receive up to $8,500 per year for five years for operation and maintenance, as long
as they continue to demonstrate meaningful use.33 Providers receiving payments
must cover any additional costs incurred in setting up and maintaining their
HIT systems. Acute care hospitals with more than 10 percent of their patients on
Medicaid and children’s hospitals of any Medicaid patient volume can receive
incentive payments for the purchase of EHR technology up to the amount
allowed under the Medicare incentive program for hospitals.34 Providers who
adopt EHRs after 2016 will not be eligible for incentive payments.
Non-hospital physicians (including pediatricians) are therefore eligible to receive

up to $63,750 if they have at least 30 percent Medicaid patient volume under the
program. An alternative payment schedule and patient-mix criteria is provided for
office-based pediatricians who have at least 20 percent Medicaid patient volume,
who may receive up to $42,500. The choice for physicians between the two
incentive programs is significant: for early adopters, potential Medicaid incentive
payments could be significantly higher than under the Medicare program.35
As estimated by researchers at the George Washington University, about 15

percent of all office-based physicians in the nation would qualify for the Medicaid
incentive payments, including nearly 99 percent of FQHC physicians. If all
qualifying physicians apply for the Medicaid incentives and receive the maximum
level of payments, the federal government could invest more than $2.8 billion
in HIT through Medicaid, making significant strides toward reaching the HHS
strategic plan’s goal of 40 percent physician adoption by 2012.36
Privacy Reforms
Although national opinion surveys have shown that overwhelming numbers of

consumers want their doctors to be able to access all of their health information
in order to provide the best care, concern about health information privacy
is widespread. This unease is particularly evident with regard to information
in electronic form, due to the volume of information available about specific
patients, perceived ease of access to electronic data, and its potential for harm.37
In response to these concerns, and in recognition of the fact that protecting
individuals’ health information is necessary in order to build public trust in
electronic health information systems,38 Congress crafted ARRA to significantly
revise health information privacy and security law, particularly the Health
Insurance Portability and Accountability Act (HIPAA). As shown in Table 5, the
statute broadens the reach under HIPAA and strengthens its privacy and security
standards, in addition to adding new provisions related to enforcement and
entities not covered by HIPAA.
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Expanded Patient Rights
The effort to encourage individuals to participate more actively in managing

their own health care, including through the use of consumer-facing technologies
such as personal health records (PHRs), will only be successful if individuals
can easily and promptly obtain electronic access to their health records.39 ARRA
supports this need by specifying that when a HIPAA covered entity 40 uses an
EHR containing an individual’s personal health information (PHI),41 he or she
has a right to a copy of the record in an electronic format and to have the record
sent directly to another person.42 In addition, ARRA gives individuals the right
to request that providers restrict the disclosure of their PHI to health plans for
the purpose of carrying out payment or health care operations. Under HIPAA,
choosing to honor such a request was voluntary; compliance is now mandatory
if the PHI pertains to a health care item or treatment for which the patient
paid out-of-pocket in full and if disclosure is not otherwise required by law.43
The provision does not apply to disclosures for treatment purposes or to
de-identified information.
Table 5: Privacy Reform
ARRA maintains and strengthens the privacy and security provisions of HIPAA. Provisions are effective February 17,
2010. Highlights include:
• Individuals have the right to a copy of their electronic health record (EHR) in electronic format and to have the record sent directly
to another person when a HIPAA covered entity1 uses an EHR containing protected health information (PHI).
• Individuals may request providers to restrict disclosure of their PHI for payment or for health care operations if the PHI pertains
to a health care item or treatment which the individual has paid for, in full, out-of-pocket. Compliance is mandatory unless the
disclosure is otherwise required by law.
• Individuals have the right to receive an accounting of disclosures of health information through an EHR for disclosures made for
treatment, payment, and health care operations for a period of three years prior to the request.2
•C
overed entities must notify individuals whose unsecured PHI has been disclosed as a result of a privacy or security breach.
The provision is not limited to breaches of the security of online information.
•C
overed entities will be deemed in compliance with HIPAA when they limit the PHI used, disclosed, or requested to a “limited data
set.” If needed by the covered entity, the “minimum necessary” amount of PHI may be used. The secretary of HHS is required to
issue guidance on the minimum necessary standard, as well as HIPAA’s requirements for the de-identification of PHI.
• The sale of patient information by a covered entity or business associate without the patient’s consent is generally prohibited.
•T
he use of PHI for marketing purposes without the individual’s authorization is generally prohibited. Prohibition includes
communications paid for directly or indirectly by an outside entity, unless the communication refers to drugs or biologics currently
prescribed for the patient.
• Applies HIPAA’s privacy and security requirements directly to business associates.1
• Expands the definition of business associate to include certain entities not currently covered by HIPAA, including health information
exchanges, regional health information organizations, and other organizations that transmit PHI to a covered entity or its business
associate and require routine access to PHI.
• Subjects business associates to the same civil and criminal penalties as covered entities.
• Increases civil monetary penalties for HIPAA violations and adds new enforcement approaches. Requires HHS, in consultation with
the Federal Trade Commission, to conduct and submit a report to Congress on recommended privacy and security.
• Requires HHS, in consultation with the Federal Trade Commission, to conduct and submit a report to Congress on recommended
privacy and security requirements for entities not currently covered under HIPAA.
Source: AMA, CMS
Continued
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Finally, under current HIPAA regulations, covered entities are required to provide
an accounting of certain disclosures of PHI at an individual’s request, but they
do not need to account for disclosures related to treatment, payment or health
care operations.44 ARRA expands individuals’ rights in this regard to include all
disclosures made for treatment, payment and health care operations made
through an EHR during the three-year period prior to the request.45
Increased Duties for Business Associates and Other Entities
Until the passage of ARRA, business associates of covered entities were not
directly subject to the detailed requirements of the privacy and security rules
established under HIPAA. Instead, business associates could only be held
accountable to the covered entities with which they contracted for complying
with the contract terms and any applicable HIPAA rules.46 In the event of a
breach, the business associate would face only a contract claim by the covered
entity, and unless the covered entity sustained economic damages from the
breach there would be little incentive to bring such a claim. Business associate
contracts therefore have been viewed by critics as an ineffective way of protecting
health information, particularly in the hands of large aggregators such as health
information exchanges, which typically are the business associates of covered
entities that participate in the exchange. The act addresses this issue and also
imposes new requirements on vendors of PHRs and other non-HIPAA entities.
Under ARRA, business associates will now be required to comply directly with
most provisions of the HIPAA Security Rule.47 The act does not apply the full
range of HIPAA privacy standards to business associates, but does prohibit
business associates from disclosing PHI outside of the terms of a HIPAA business
associate contract.48 The privacy and security requirements created by ARRA itself
will apply to business associates, and business associates will now be subject to the
same civil and criminal penalties applicable to covered entities under HIPAA.49
In addition, gaps in HIPAA coverage of a number of innovative electronic health

information tools have been perceived as possible obstacles to promoting the
widespread use of HIE because the public may not trust that their information
will be protected in the absence of applicable minimum privacy standards.50
ARRA therefore clarifies that health information exchanges and other
organizations that transmit PHI to a covered entity (or its business associate)
and require routine access to PHI are business associates and must enter into
business associate contracts with the covered entity.51 The same applies to vendors
that contract with a covered entity to allow the covered entity to offer a PHR
to patients as part of an EHR.52 Finally, ARRA requires the secretary of HHS
to conduct a study and submit a report to Congress on recommended privacy
and security requirements for entities that are not currently covered under the law,
which could be interpreted to include consumer-facing health IT tools now being
created by internet companies such as Microsoft, Google and WebMD.53
Privacy and Security Breach Notices
Although a number of states have enacted laws requiring businesses to notify

consumers of breaches of the security of their personal information in electronic
databases, HIPAA has no strict notification requirement. ARRA establishes the
first national data security breach notification law by requiring covered entities to
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notify individuals whose unsecured PHI has been disclosed as a result of a privacy
or security breach.54 In certain cases, the covered entity must also notify the
secretary of HHS and the general public. If a breach is discovered by a business
associate, it is required to notify the covered entity, including the identification
of each individual who is reasonably believed to have been affected. Unlike
many state notification laws, the new federal law is not limited to breaches of the
security of online information or restricted to financially sensitive information,
such as social security numbers. ARRA does not preempt state requirements that
are more restrictive and does not apply to certain unintentional disclosures of
protected health information.55
The statute also applies similar breach notification requirements to vendors of

PHRs, as well as businesses that offer products or services through the website
of a PHR vendor or a covered entity that offers PHRs, and entities that access
information in or send information to a PHR.56 As required by the statute, the
government issued rules implementing the breach notification requirements for
both covered and noncovered entities, as well as guidance describing a safe
harbor from the requirements, in August 2009.57
Restrictions on Marketing, Fundraising and the Sale of PHI
Although HIPAA addresses the use of PHI for marketing purposes, consumers
have continued to express serious privacy concerns regarding the topic.58
ARRA addresses these concerns by clarifying that patient consent is required
for marketing communications (i.e., communications by a covered entity or
business associate that encourage patients to purchase or use a product or service)
subject to certain exceptions. In addition, the statute revises HIPAA to address
a perceived “loophole” that allowed third parties to pay covered entities to send
targeted marketing communications that the entities could not send themselves
without individual authorization. ARRA now requires prior authorization for an
individual’s PHI to be used to make communications that are paid for (directly
or indirectly) by an outside entity. Such communications are acceptable in the
absence of patient consent only when they describe a drug or biologic that is
currently prescribed for the patient and as long any payment received by the
covered entity in exchange for making the communication is reasonable. In
addition, ARRA allows providers to engage in fundraising activities using a
patient’s PHI as long as they provide an opportunity for the patient to opt
out of future solicitations.59
Finally, except in the area of marketing, HIPAA does not prohibit a covered
entity from being paid for PHI as long as the disclosure is otherwise permitted.60
ARRA changes this standard by generally prohibiting a covered entity or business
associate from selling patients’ PHI without specific authorization with certain
exceptions that include payment for treatment, public health activities, research,
or other activities as specified by the secretary.61
Limited Datasets and De-Identified Data
In order to offer stronger protection to PHI in health information exchange,

advocates have called for the increased use of data stripped of patient identifiers
instead of fully identifiable information where it is possible to do so and still
accomplish the purpose for which the data was legitimately accessed.62 ARRA
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addresses this idea by specifying that covered entities will be deemed in compliance
with HIPAA when they limit the PHI used, disclosed, or requested to a “limited
data set” 63 (a dataset defined by the HIPAA Privacy Rule that is stripped of a
number of categories of patient identifying information and can be used pursuant
to a data use agreement for research, public health and health care operations
purposes).64 Limited datasets provide a clear outline of what information can be
used or disclosed by a covered entity in situations not involving direct treatment
or payment. If needed by the covered entity, the “minimum necessary” amount of
PHI needed to accomplish the intended purpose may be used. Covered entities
and business associates will have discretion to decide what constitutes “minimum
necessary,” and de-identified information is exempt from the disclosure limits.65
In addition, the act addresses the confusion expressed by some covered entities
regarding how to apply the minimum necessary standard. The act requires the
secretary to issue guidance about the standard. The secretary must take into
consideration that “minimum necessary” should encompass the information
necessary to improve patient outcomes and to detect, prevent, and manage
chronic disease.66 The secretary is also required to develop guidance on how best
to implement requirements under HIPAA for the de-identification of PHI.67
Improved Enforcement
Finally, in response to criticism that the HIPAA rules have not been adequately
enforced, ARRA strengthens HIPAA privacy enforcement by including new
enforcement approaches; tiered penalties based upon the nature and extent of a
violation and the harm caused; and the empowerment of state attorneys general
to bring civil suits in federal court to recover damages on behalf of states’ citizens.
Increased penalties for violations of HIPAA are effective immediately, while
penalties for violations of provisions cited under ARRA will be effective in 2011.68
Challenges
ARRA has fundamentally changed the landscape of federal HIT law and policy.
Many of the law’s provisions will take effect in February 2010, although the
HIPAA penalty provisions were effective immediately upon the bill’s passage.
Provisions that require implementing regulations could take two years or longer
to take effect.69
While HHS has begun the process of issuing rules and guidance for ARRA HIT
provisions, major implementation challenges remain. If physicians and hospitals
will benefit from the most generous Medicare and Medicaid incentive payments,
the programs’ infrastructure should be in place well before 2011. As National
Coordinator David Blumenthal has noted, however, “[it] takes time to develop
and implement innovative federal programs, and it will take even more time to
create the local institutions needed to support HIT implementation.”70
The federal government also must define two critical terms in order to support
the incentive programs: “certified EHR” and “meaningful use.” As discussed
above, the HIT Policy and Standards Committees have made recommendations
for the initial criteria for meaningful use and HHS is scheduled to publish the
rule at the end of 2009.71 (Please see Chapter 5 of this report for further
discussion.) The balance that the government must strike in defining the term
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is precarious: “meaningful use” could be an important tool for motivating

practitioners to take full advantage of EHRs, but if the requirements are
too high, the definition itself could become a barrier to HIT adoption.72
In addition, any program of certification of EHR systems must take the
meaningful use standards into consideration to ensure that certified systems
will enable providers to meet the standards and qualify for federal subsidies.
Since 2005, ONCHIT has contracted with a private organization, the

Certification Commission for Health Information Technology (CCHIT), to
certify EHRs as having the basic capabilities the federal government needs.73
Many of the EHRs certified thus far are difficult to use, however, and are not
designed to meet goals defined by ARRA for improving quality and efficiency in
the health care system. Not only must the standards developed by ONCHIT for
a “certified EHR” be designed to meet those goals, but physicians and hospitals
also will have to use them effectively in order to do so.74 The HIT Standards
Committee made recommendations regarding certification standards in August
2009;75 ONCHIT is expected to issue a final rule by the end of the year.76
Although the development and certification of individual EHR systems is

essential to HIT adoption, meeting the broad policy objective of designing,
building, operating and governing a nationwide health information structure
under ARRA depends on a variety of other system-wide innovations that
promote interoperability and communication among providers in diverse
settings. Physician adoption incentives are only part of the health care system
investments needed to achieve quality and efficiency improvements.77
As discussed above, the ability of providers to benefit from Medicare and
Medicaid incentive programs set forth by ARRA depends on states ensuring
that the necessary infrastructure is in place to allow providers to participate in
HIE. Moreover, the statute’s explicit focus on providers with heavy Medicaid case
loads and requirement that EHRs link to health information exchange networks
gives state governments an important role in determining how HIE will serve the
needs of safety-net providers and the patients they serve.
Conclusion
HIT provisions under the auspices of ARRA reflect a shared conviction

among the administration, Congress and many health care experts that
electronic information exchange is essential to improving health and health
care. HIT, however, is not an end in itself, but a means of improving the
quality of health care, the health of populations, and the efficiency of health
care systems. As noted by David Blumenthal, it will be tempting for us to
measure HITECH’s success in terms of the numbers of computers or EHRs
installed in physicians’ offices and hospitals. 78 Instead, our goal is to use the
tools provided by ARRA to help facilitate a major transformation in American
health care made possible through the creation of a secure, interoperable
nationwide health information network.79
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Endnotes
1. Executive Order 13335, Incentives for the Use of Health Information Technology
and Establishing the Position of the National Health Information Technology
Coordinator. Washington, D.C.: April 27, 2004. Available at http://edocket.access.
gpo.gov/2004/pdf/04-10024.pdf. Accessed on September 5, 2009. Executive
Order 13410, Promoting Quality and Efficient Health Care in Federal Government
Administered of Sponsored Health Care Programs.Washington, D.C.: August. 22,
2006. Available at http://edocket.access.gpo.gov/2006/pdf/06-7220.pdf. Accessed
on September 5, 2009.
2. DesRoches C, Rosenbaum S. “Scanning the Health Information Technology-
Related Policy Environment: The Promulgation of ‘Safe Harbor’ Regulations
to Incentivize Technology Adoption.” In Blumenthal D, DesRoches C,
Donelan K, et al. Health Information Technology in the United States: Where We
Stand, 2008, Robert Wood Johnson Foundation, 2008. Available at www.rwjf.
org/pr/product.jsp?id=31831. Accessed on September 5, 2009.
3. Blumenthal D. “Stimulating the Adoption of Health Information
Technology.” New England Journal of Medicine, 360(10): 1477-1479, 2009;
Goldstein MM and Blumenthal D. “Building an Information Technology
Infrastructure.” Journal of Law, Medicine and Ethics, (Symposium Edition)
709–715, 2008; Lurie N, Fremont A. “Building Bridges Between Medical Care
and Public Health.” Journal of the American Medical Association, 302(1): 84–86,
2009; Chaudhry B, Wang, J, et al. “Systematic Review: Impact of Health
Information Technology on Quality, Efficiency, and Costs of Medical Care.”
Annals of Internal Medicine, 144(10): 742–52, 2006.
4. Executive Order 13335.
5. U.S. Department of Health and Human Services. The ONC-Coordinated
Federal Health IT Strategic Plan: 2008-2012, 2008. Available at http://healthit.
hhs.gov/portal/server.pt/gateway/PTARGS_0_10731_848083_0_0_18/
HITStrategicPlan508.pdf. Accessed on September 5, 2009.
6. The American Recovery and Reinvestment Act of 2009 (ARRA), P.L. 111–5,
123 Stat 115, February 17, 2009.
7. Rosenbaum S, Cartwright-Smith L, Burke T, et al. “Side-by-Side Chart
Detailing Major Health Information Technology, Public Health, Medicaid,
and COBRA Provisions of the American Recovery and Reinvestment Act
of 2009.” Hirsh Health Law and Policy Program, The George Washington
University, March 18, 2009. Available at www.gwumc.edu/sphhs/departments/
healthpolicy/dhp_publications/pub_uploads/dhpPublication_C02EEDD2-5056-
9D20-3DE547F4F4F83B34.pdf. Accessed on July 8, 2009.
8. United States Department of Health and Human Services. American Recovery
and Reinvestment Act of 2009¸ Implementation Plans, May 2009. Available
at www.hhs.gov/recovery/reports/plans/hhs_implementation_plans.pdf. Accessed on
September 5, 2009.
9. Rosenbaum S et al.
10. The HIT provisions of the act are located primarily in Title XIII, Division A,
Health Information Technology, and in Title IV of Division B, Medicare and
Medicaid Health Information Technology. These titles together are cited
as the Health Information Technology for Economic and Clinical Health
(HITECH) Act.
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11. ARRA § 13101, adding new Title XXX, Section 3001 to the Public Health
Service Act (42 U.S.C. § 201 et seq.), 42 U.S.C.A. § 300jj–11 (West, Westlaw
through August 2009).
12. Included among the programs authorized are: an HIE grant program for states
or “state-designated” entities, ARRA § 13301, adding new Subtitle B section
3013 to Title XXX of the Public Health Service Act (42 U.S.C. § 201 et seq.),
42 U.S.C.A. § 300jj–33 (West, Westlaw through August 2009); a state-based
EHR adoption loan program, ARRA § 13301, (adding new Subtitle B section
3014 to Title XXX of the Public Health Service Act (42 U.S.C. § 201 et seq.),
42 U.S.C.A. § 300jj–34 (West, Westlaw through August 2009); grants to state-
based and other institutions of higher education for workforce training, ARRA
§ 13301 (adding new Subtitle B sections 3015 and 3016 to Title XXX of the
Public Health Service Act (42 U.S.C. § 201 et seq.), 42 U.S.C.A. §§ 300jj-35
and 36 (West, Westlaw through August 2009); and grants to state-based and
other institutions of higher education, nonprofits and federal government labs
for new technology research & development, ARRA § 13202, 42 U.S.C.A. §
17912, 2009.
13. ARRA § 13301,adding new Subtitle B section 3012 to Title XXX of the Public
Health Service Act (42 U.S.C. § 201 et seq.), 42 U.S.C.A. § 300jj–32 (West,
Westlaw through August 2009).
14. United States Department of Health and Human Services, 2009.
15. ARRA § 13101, adding new Title XXX sections 3001(a)–(b) to the Public
Health Service Act (42 U.S.C. § 201 et seq.), 42 U.S.C.A. § 300jj–11 (West,
Westlaw through August 2009). On August 7, 2009, the secretary delegated
further authority to the national coordinator to administer the Incentives for
the Use of Health Information Technology provisions under ARRA § 13301
adding new Subtitle B sections 3011–3017 to Title XXX of the Public Health
Service Act (42 U.S.C. § 201 et seq.), 42 U.S.C.A. §§ 300jj–31, 32, and 33
(West, Westlaw through August 2009), with the exception of § 3012(c)(5),
the section governing financial support of the Regional Extension Centers.
Available at http://edocket.access.gpo.gov/2009/pdf/E9-19709.pdf. Accessed on
September 5, 2009.
16. ARRA § 13101, adding new Title XXX section 3002 to the Public Health
17. ARRA § 13101, adding new Title XXX section 3003 to the Public Health
18. ARRA § 13101, adding new Title XXX section 3004(b) to the Public Health
19. ARRA §§ 13101, adding new Title XXX section 3007 to the Public Health
through August 2009), 13112 (42 U.S.C.A. § 17902).
20. ARRA Title IV Subtitle A § 4101(a) (adding new section 1848(o)(2)(A)
to the Social Security Act), 42 U.S.C.A. § 1395w–4 (West, Westlaw through
August 2009).
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21. ARRA Title IV Subtitle A § 4101(a) (adding new section 1848(o)(2)(A)

to the Social Security Act), 42 U.S.C.A. § 1395w–4 (West, Westlaw through
August 2009).
22. ARRA Title IV Subtitle B § 4201(a)(2) (adding new section 1903(t)(6)(C)
to the Social Security Act), 42 U.S.C.A. § 1396b (West, Westlaw through
August 2009).
23. U.S. Department of Health and Human Services, Office of the National
Coordinator of Health IT, “Meaningful Use.” Available at http://healthit.hhs.
gov/portal/server.pt?open=512&objID=1325&parentname=CommunityPage&par
entid=4&mode=2&in_hi_userid=10741&cached=true. Accessed on
September 5, 2009.
24. ARRA Title IV Subtitle B § 4101 (a) (adding new section 1848 (o)(1)(A)(i) and
(o)(1)(B) to the Social Security Act), 42 U.S.C.A. § 1395w-4 (West, Westlaw
through August 2009). Payments could total as much as $18,000 in the first
year for physicians who adopt in 2011 or 2012; $15,000 for those who adopt
in 2013; and $12,000 for those who adopt in 2014. Physicians who adopt
after 2014 are not eligible. The incentive payments phase down gradually over
five years, ending in 2016. Physicians who demonstrate meaningful use in
2011 could therefore collect $44,000 in bonus payments, and those adopting
in 2013 could collect $27,000 over three years. Some experts estimate that
the cost of purchasing, installing, and implementing an EHR system in a
medical office to be approximately $40,000. See Blumenthal D. “Stimulating
the Adoption of Health Information Technology.” New England Journal of
Medicine, 360(10): 1477–1479, 2009.
25. ARRA Title IV Subtitle B § 4101 (a) adding new section 1848 (o)(1)(A)(i) and
(o)(1)(B) to the Social Security Act, 42 U.S.C.A. § 1395w-4 (West, Westlaw
26. ARRA Title IV Subtitle B § 4101 (b) adding new section 1848 (a)(7)(A)
to the Social Security Act, 42 U.S.C.A. § 1395w-4 (West, Westlaw through
August 2009).
27. ARRA Title IV Subtitle B § 4102 (a)adding new sections 1886 (n)(1) and
1814 (1)(3) to the Social Security Act, 42 U.S.C.A. § 1395w-4 (West, Westlaw
through August 2009) and ARRA Title IV Subtitle B § 4102 (b) (adding
new sections 1886 (b)(3)(B)(x) and 1814(1)(4) to the Social Security Act), 42
U.S.C.A. § 1395w-4 (West, Westlaw through August 2009).
28. Eligible providers are physicians, nurse-midwives, nurse practitioners, dentists,
certain physician assistants, children’s hospitals, and general acute care
hospitals. ARRA Title IV Subtitle B § 4201 (a) adding new section 1903 (t)(2)
(A), (t)(3)(B) and (t)(3)(D) to the Social Security Act.
29. ARRA Title IV Subtitle B § 4201 (a) (adding new section 1903 (t)(2)(A),
(t)(3)(B) and (t)(3)(D) to the Social Security Act), 42 U.S.C.A. § 1395w–(West,
30. Finnegan B, Ku L, Shin P, Rosenbaum S. “Boosting Health Information
Technology in Medicaid: The Potential Effect of the American Recovery and
Reinvestment Act.” Policy Research Brief No. 9. Washington: Geiger Gibson/
RCHN Community Health Foundation Research Collaborative, 2009.
Available at www.gwumc.edu/sphhs/departments/healthpolicy/dhp_publications/
pub_uploads/dhpPublication_506602E1-5056-9D20-3D7DD946F604FDEE.pdf.
Accessed on September 5, 2009.
C hapter 4
31. ARRA Title IV Subtitle B § 4201(a) (adding new section 1903 (t)(2)(A),
(t)(3)(B) and (t)(3)(D) to the Social Security Act), 42 U.S.C.A. § 1396b (West,
32. ARRA Title IV Subtitle B § 4201(a) (adding new section 1903 (t)(2)(A)(ii)
August 2009).
33. ARRA Title IV Subtitle B § 4201(a) (adding new section 1903 (t)(1)(A) and
(t)(4) to the Social Security Act, 42 U.S.C.A. § 1396b (West, Westlaw through
August 2009).
34. ARRA Title IV Subtitle B § 4201(a) (adding new section 1903(t)(2)(B)
August 2009).
35. Finnegan et al.
36. Finnegan et al.; U.S. Department of Health and Human Services, 2008.
37. Goldstein.
38. DesRoches C, Blumenthal D. (eds)., Health Information Technology in the United
States: Where We Stand, 2008. Robert Wood Johnson Foundation, 2008.
Available at www.rwjf.org/pr/product.jsp?id=31831. Accessed on September
5, 2008; McGraw D. “Privacy and Health Information Technology,” Legal
Solutions in Health Reform. Washington: O’Neil Institute for National and
Global Health Law, 2009.
39. McGraw.
40. HIPAA “covered entities” are defined as health plans, health care
clearinghouses and health care providers who transmit health information.
45 CFR § 160.103 (2007).
41. “PHI” is defined by HIPAA as “individually identifiable health information”
that is held or transmitted by a covered entity (or its business associate) in any
form or media, whether electronic, paper or oral. 45 CFR § 160.103 (2007).
42. ARRA § 13405, 42 U.S.C.A. § 17935 (West, Westlaw through August 2009).
44. 45 C.F.R. § 164.528 (2007).
45. ARRA § 13405(c), 42 U.S.C.A. § 17935 (West, Westlaw through August 2009).
46. 45 C.F.R. § 164.504(e)(1) (2007).
47. ARRA § 13401, 42 U.S.C.A. § 17931 (West, Westlaw through August 2009),
applying 45 CFR Sections 164.308 (administrative safeguards), 164.310
(physical safeguards), 164.312 (technical safeguards), and 164.316 (policies and
procedures and documentation requirements) to business associates.
49. ARRA §§ 13401, 13404, 42 U.S.C.A. §§ 17931, 17935 (West, Westlaw through
August 2009).
50. McGraw D.
C hapter 4
53. ARRA § 13424(b), 42 U.S.C.A. § 17953 (West, Westlaw through August 2009).
56. ARRA § 13407 42 U.S.C.A. § 17937 (West, Westlaw through August 2009).
57. See Department of Health and Human Services, Breach Notification for
Unsecured Protected Health Information, Interim final rule with request
for comments, 45 CFR Parts 160 and 164, 74 FR 42740, August 24, 2009.
Available at http://edocket.access.gpo.gov/2009/pdf/E9-20169.pdf. Accessed on
September 5, 2009; Federal Trade Commission, Health Breach Notification
Rule; Final Rule, 16 CFR Part 318, 74 FR 42962. Accessed on August 25,
2009. Available at www2.ftc.gov/os/2009/08/R911002hbn.pdf. Accessed on
September 5, 2009.
58. McGraw.
60. 45 C.F.R. §§ 164.501, 164.508(a)(3) (2007).
61. ARRA 13405(d), 42 U.S.C.A. § 17935 (West, Westlaw through August 2009).
62. McGraw.
63. See 45 C.F.R. § 164.514(e) (2007).
68. See generally ARRA §§ 13409, 13410 (amending sections 1177(a) and 1176 of
the Social Security Act), 42 U.S.C.A §§ 1320d-6(a), 1320d-5 (West, Westlaw
69. See United States Department of Health and Human Services, American
Recovery and Reinvestment Act of 2009, Implementation Plans (May 2009).
Available at www.hhs.gov/recovery/reports/plans/hhs_implementation_plans.pdf.
70. Blumenthal 2009.
71. U.S. Department of Health and Human Services, Office of the National
Coordinator of Health Information Technology, “Meaningful Use.”
72. Blumenthal, 2009.
73. Department of Health and Human Services, HIT Certification: CCHIT.
Available at http://healthit.hhs.gov/portal/server.pt?open=512&objID=1196&
&PageID=15507&mode=2&in_hi_userid=10741&cached=true. Accessed on
September 5, 2009.
74. Blumenthal 2009.
75. See Department of Health and Human Services, Health IT Standards
Committee (a Federal Advisory Committee). Available at healthit.hhs.gov/
portal/server.pt?open=512&objID=1271&parentname=CommunityPage&parentid
=6&mode=2. Accessed on September 5, 2009.
C hapter 4
76. Conn J. “CCHIT Splits EHR Certification Into two Tiers,” Modern
Healthcare, September 4, 2009. Available at www.modernhealthcare.com/
apps/pbcs.dll/article?AID=/20090904/REG/309049989/1029. Accessed on
September 5, 2009.
77. Finnegan.
78. Blumenthal D 2009.
79. Department of Health and Human Services, “Electronic Health Records
and the 21st Century Health Care System, A Message from Dr. David
Blumenthal, National Coordinator for Health Information Technology.”
Available at http://healthit.hhs.gov/portal/server.pt?open=512&objID=1
327&parentname=CommunityPage&parentid=112&mode=2&in_hi_
userid=11113&cached=true. Accessed on September 5, 2009.
Chapter 5: Potential Implications of Widely Adopted Meaningfully
Used HIT: Is Quality Measurement and Reporting About to Take Flight?
Michael W. Painter, J.D., M.D.
Introduction
In 1896, Major Baden-Powell, then secretary of the Aeronautical Society (not yet Royal)
wrote to the great physicist, Lord Kelvin, inviting him to become a member. In reply, he
received a letter stating “I am afraid I am not in the flight for ‘aerial navigation’… I have
not the smallest molecule of faith in aerial navigation other than ballooning, or of expectation
of good results from any of the trials we hear of…” Kelvin was not alone in his opinion…
Simon Newcomb, another physicist of lesser but still very considerable eminence, wrote at
about the same time: “The demonstration that no possible combination of known substances,
known forms of machinery and known forms of force, can be united in a practicable machine
by which men shall fly long distances through the air, seems to the writer as complete as it is
possible for the demonstration of any physical fact to be.”
This, it should be noted, was less than a decade before the Wrights flew…1
The evidence that measuring the quality of care and reporting those measures
publicly promotes improved patient outcomes remains ambiguous. For example
the most comprehensive review of the literature to date concludes that public
reporting provides mixed signals and that its usefulness remains unknown.2 Others
warn that public reporting of quality measures may have unintended results such
as worsening certain disparities because physicians might avoid difficult-to-treat
patients in an effort to improve measurement scores.3, 4
Critics of the current claims-based attempts to construct performance measures for

reporting suggest that these efforts are fraught with statistical problems that could
decrease the utility of the measures for public reporting.5 Many also argue that
measures derived from claims data do not fully or accurately reflect the clinical
care experience.6
Construction of measures from clinical data is currently problematic as well.

Manually extracting clinical data from patient charts is extremely time-consuming
and costly. The hope is that health information technologies (HIT), such as
electronic health records (EHRs), can make clinical data extraction both
efficient and inexpensive, which would facilitate large-scale clinical performance
measurement efforts.7 However, with the current state of information technology, it
is often very difficult to construct measures in part or in full based on clinical data
extracted from the medical record. A large-scale measurement and reporting strategy,
however, must be able to incorporate clinical data quickly, easily and cheaply.
Therefore, two main barriers stand in the way of large scale electronic record use
for collecting and reporting clinical quality measures. First, as prior editions of this
report have shown, the current level of EHR adoption in general is dismally low in
C hapter 5
virtually all clinical settings.8, 9 Second, adoption of electronic records and systems
with the ability to enhance and accelerate measurement and public reporting is
likely even lower still, if present at all.
Many point to this evidence or, rather, the lack of evidence, and voice skepticism
and, in some instances, outright opposition to measurement and public reporting
efforts.10 Many argue, as Dr. Newcomb did in the 1890s about flight, that the
known facts do not necessarily indicate that efforts to advance measurement and
reporting will help improve health care quality.
In spite of the skepticism and limited, ambiguous literature, there is mounting

evidence that the field is not, in fact, waiting for proof to guide the effort. Instead,
the pressing nature and urgency of the nation’s health care quality problems,
in the context of high and rising health care costs, are prompting escalating
coordinated efforts and investments to build sophisticated measurement capacity
that will produce measures of process, structure and outcome to be reported to the
public. The intent of such an effort is to drive quality improvement both through
transparency to the consumer and to health professionals.
This chapter explores the background and current efforts to build a measurement
and reporting infrastructure. It will describe the status of the current so-called
“measurement enterprise.” It will also describe the potentially critical role of the
adoption and meaningful use of electronic health records (EHRs) and funding
from the Health Information Technology for Economic and Clinical Health Act
(HITECH) in advancing measurement and reporting. The chapter will examine
how the development of the meaningful use definition, the role of consumers
in this process, and the efforts to transition from claims-based to electronically
generated clinically-based performance measures will surely change the landscape
of the efforts to capture and report the quality of care Americans receive.
Measurement and Reporting Efforts are Building and Accelerating
Virtually every major credible national consensus body that has commented on
the nation’s health care quality problems has emphatically urged the development
and use of measures for public reporting.
In 1998, the President’s Advisory Commission on Consumer Protection and

Quality in the Health Care Industry found that “[a] key element of improving
health care quality is the nation’s ability to measure the quality and provide easily
understood, comparable information on the performance of the industry.”11 The
commission further noted that “[s]teps should be taken to ensure that comparative
information on health care quality is valid, reliable, comprehensive, and available
in the public domain for use by consumers, purchasers, practitioners, quality
oversight organizations and others.”12 This commission also recommended that
the field establish two new entities to address these recommendations. The first
would be a new public entity that would identify national aims for improvement.
The second would be a private entity with key health care representatives from
both the private and public sector to implement a plan for measuring and
reporting those measures. This second entity became the National Quality Forum
(NQF). Congress, to date, has not authorized the first.
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Then in 2001 the Institute of Medicine (IOM) in Crossing the Quality Chasm urged
that the field quickly make information about performance widely, publicly
available to help the public make informed health and health care decisions.13
Again, in 2006 the IOM in Performance Measurement: Accelerating Improvement
noted that “[t]here are many obstacles to rapid progress in improving the quality
of health care, but none exceeds the fact that the nation still lacks a coherent,
goal-oriented, consistent and efficient system for assessing and reporting on the
performance of the health care system.”14 The IOM Committee went on to add
that “[f]ailure to establish a well-functioning national performance measurement
and reporting system would severely compromise our ability to achieve the
essential quality improvements called for in the Quality Chasm report.”15
NQF, among other things, is now the national consensus body that develops
national priorities and goals for performance improvement and is charged with
endorsing national consensus standards for measures. In order for a measure to
receive NQF endorsement, the measure must be appropriate both for quality
improvement and public reporting.16 According to NQF “[a] standardized
performance measurement and reporting system is a core building block for
creating a higher quality, more affordable health system, and is necessary to
successfully implement virtually all reform strategies.”17
In addition NQF has more recently convened a collaborative effort of 32 major

national organizations that represent all sectors of American health care to set the
most important priorities and goals for nation-wide improvement in health care
performance.18 This collaborative effort, called the National Priorities Partnership
(NPP), emphasizes the critical importance of developing standardized measures
in the effort to improve quality. NPP literature further notes that “[a]ggressively
moving toward more electronic data sources will allow measures to be more easily
collected as part of the care process.”19
The Medicare Payment Advisory Commission (MedPAC), an independent

congressional agency established by the Balanced Budget Act of 1997, advises
Congress on issues that impact Medicare. MedPAC has commented often on the
importance of measurement and reporting to help drive improvements in quality
and to support payment incentives that would sustain those improvements. In its
March 2005 report it noted:
Quality measurement is an important building block for improving quality. It gives

providers information on their own performance to identify areas for quality improvement
efforts, evaluate the results of those efforts, and compare their performance to others. It also
allows payers and consumers to make judgments about the quality of care they pay for
and receive. However, collecting and reporting quality information can pose a burden on
providers, particularly when it involves abstracting information from medical records or
other special data collection efforts. Information technology, if sufficiently advanced, could
automate and streamline this process. Paying for quality is one way to build the business case
for IT adoption.20
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The efforts to develop quality measures for reporting include the recent large federal
investment in national adoption of health information technology authorized
in the American Recovery and Reinvestment Act (ARRA).21 (See Chapter 4.)
HITECH provides for significant federal funding to advance the adoption of
EHRs. Further, HITECH provisions promote not just adoption of EHRs, but
rather adoption of the technology explicitly for meaningful use of that technology.
Meaningful use specifically includes using the technology to construct measures
for reporting purposes.
HITECH requires that for an EHR to promote meaningful use it must be certified,
exchange electronic health information to improve the quality of health care, and be
used to report measures of the clinical quality of care. Beyond that the secretary of
HHS, the Office of the National Coordinator for Health Information Technology
(ONCHIT) and the Centers for Medicare and Medicaid Services (CMS) are in the
process of developing the precise regulatory definition of meaningful use.22 That
regulatory definition will not be finalized until 2010. Nevertheless, it seems clear
that Congress has also spoken on the importance of dramatically increasing the
national adoption of EHRs for use in measuring the quality of care and reporting
those measures in efforts to improve health care quality.
The “Measurement Enterprise”
In June 1999, Vice President Al Gore convened a planning committee to

implement the recommendation of the President’s Advisory Commission on
Consumer Protection and Quality in the Health Care Industry for a private entity
to produce a measurement and reporting strategy.23 NQF emerged from this
planning committee work with initial funding from the Robert Wood Johnson
Foundation (RWJF) and others. NQF began operations in late 1999. NQF now
has about 350 members representing essentially all aspects of health care. It is
a private, nonprofit entity, but it has special recognition under the National
Technology Transfer and Advancement Act. That act encourages federal agencies
to adopt private sector standards endorsed by entities recognized under the act,
like NQF, rather than create new sets of standards. NQF is a neutral, voluntary
consensus body that evaluates and endorses quality measures developed by
others. NQF does not develop measures. It has, however, endorsed more than
500 measures, practices and public reporting guidelines.
A host of other entities develop measures for a variety of situations and clinical
settings. These entities include the National Committee for Quality Assurance
(NCQA), the Joint Commission (formerly the Joint Commission for Accreditation
of Health Organizations), the Centers for Medicare and Medicaid Services
(CMS), the Agency for Healthcare Research and Quality (AHRQ) and the
Physician Consortium for Performance Improvement (PCPI) convened by the
American Medical Association. In addition, medical and nursing associations,
specialty societies, and proprietary entities develop performance measures. Until
recently, all these entities developed measures as they respectively found the
need to develop a given measure or set of measures. There was no overarching
priority setting structure for measure development—a role perhaps the original
President’s Advisory Commission had envisioned for the public Advisory Council
that Congress never authorized. The NPP will likely assume this priority setting
function for measure development.
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As this measurement development and endorsement process progressed, parallel

collaborative efforts developed in a variety of clinical settings. For instance, the
Hospital Quality Alliance (HQA) began in 2002 and the AQA (previously known
as the Ambulatory Quality Care Alliance) formed in 2004 to help prioritize the
growing set of measures and promote practical ways to begin implementing those
measures into the respective clinical settings. The HQA collaboration includes
CMS, American Hospital Association, the Federation of American Hospitals,
the Association of American Medical Colleges, the Joint Commission, the
American Medical Association, the American Nurses Association, the National
Association of Children’s Hospitals and Related Organizations, American
Association of Retired People, American Federation of Labor and Council
of Industrial Organizations, the Consumer-Purchaser Disclosure Project, the
Agency for Healthcare Research and Quality, NQF, the Blue Cross and Blue
Shield Association, the National Business Coalition on Health, America’s Health
Insurance Plans, the U.S. Chamber of Commerce and others. The AQA includes
a similarly large group of specialty societies, business and consumer leaders as
well as CMS, AHRQ and NQF.
Progress on Public Reporting
Hospital Measures: In November 2000, a group of employers interested in

promoting high quality health care launched the Leapfrog Group with initial
support from the Business Round Table, the Robert Wood Johnson Foundation,
Leapfrog members and others.24 These employer leaders believed they needed
more information about the health care they were purchasing for their employees.
They based Leapfrog on the notion that purchasers have an important role to
play in promoting high quality and could work together collaboratively to help
develop more performance information to inform their decision making. Leapfrog
began collecting hospital data in 2001 from hospitals in six regions and has now
increased that number to about 38 regions including about 1,300 hospitals.25
Leapfrog’s Web site reports that the 38 regions they cover touch about half of
the U.S. population and 62 percent of all hospital beds.26 Leapfrog measures
are all endorsed by NQF and are designed for consumer as well as health plan,
employer or purchaser audiences.27 Leapfrog arguably provided a very important
initial catalytic example that inspired additional collaborative measurement and
reporting efforts. Leapfrog demonstrated the power of collaborative activity
to produce demonstrable progress in measurement and reporting. It did not,
however, on its own, of course, drive sustainable high-quality care.
From the Leapfrog example, additional collaborative activity to promote

measurement and reporting developed. In 2005 HQA helped launch Hospital
Compare, which is an internet based web tool that displays a variety of process,
outcome and patient experience measures for the public.28 Approximately 4,200
hospitals across the nation participate in Hospital Compare. Hospital participation
is voluntary; however, the reporting program operates along with the Reporting
Hospital Quality Data for Annual Payment Update (RHQDAPU) program. The
Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of
2003 authorized the RHQDAPU program. That program provides payment
incentives and penalties to promote hospital quality measure reporting. Almost
all hospitals, about 95 percent, participate successfully in this reporting program.29
C hapter 5
The program also provides CMS with the information that it uses for Hospital
Compare reporting.30 To produce these measures, nearly all hospitals use clinical
abstractors (usually nurses) to manually extract the data. Although there are not
reliable estimates of the amount of money hospitals spend in this effort, there is
little doubt that this process is both cumbersome and expensive.
Ambulatory Measures: In spite of the progress in advancing public reporting of

hospital measures with Leapfrog and Hospital Compare, reporting of outpatient
physician or physician group measures was somewhat slower to develop. To
promote ambulatory performance measure reporting, the Tax Relief and Health
Care Act of 2006 (TRHCA) provided for a new outpatient physician reporting
system now called the Physician Quality Reporting Initiative (PQRI).31 TRHCA
provided financial bonuses for physicians who participated in PQRI. In the first
year of reporting, in order to receive a bonus, eligible physicians had to report on
one to three measures out of 74 measures selected by the PQRI program. PQRI
initially used the Medicare claims system for physicians to report. CMS deemed
PQRI’s first year a success, but that year was not without problems.32
A CMS report on PQRI’s first year indicated that just over half of those submitting
reports actually received bonuses.33 Just over half the measures submitted were
submitted in a valid manner. There was also, apparently, significant physician
dissatisfaction because of some of these problems.34 Further, many physicians had
difficulty accessing the feedback reports provided by the PQRI program.35
The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) made
PQRI permanent.36 MIPPA also provided for incentive payments for reporting
measures to continue through 2010 and then, presumably, end. The next phases
of PQRI also added additional potential measures and allowed for submission of
measures from registries and other sources, not just claims-based measures.37
In addition to the federal PQRI ambulatory reporting initiative, a series of

regional collaborative efforts emerged starting in about 2006 that also sought to
advance ambulatory performance reporting. With these efforts, discussed below,
regional health care stakeholders began taking newly endorsed NQF measures
for ambulatory care and implementing measurement for public reporting locally.
At the same time, the national measurement enterprise leadership also began to
organize itself. As the number of national entities working on measurement and
reporting activities increased, there was increasing pressure for entities to sort out
their respective roles and determine a vision, priorities and overall direction of
the expanding national public-private measurement effort.
C hapter 5
The Measurement Enterprise Begins to Organize Itself
In 2006, the HQA and AQA formed a joint steering committee called the
Quality Alliance Steering Committee (QASC) to help promote measurement
implementation across the inpatient and outpatient care settings.38 With funding
from the Robert Wood Johnson Foundation, QASC developed a series of
activities under an umbrella effort called the High Value Health Care Project
(HVHC) to help accelerate the measurement implementation work.39, 40 That
HVHC effort created common data aggregation methodologies that would enable
the construction of all payer sets of claims-based measures; designed new cost
and efficiency measures for 12 common conditions across both inpatient and
outpatient care settings; promoted a series of planning activities to help guide the
implementation activities for national measurement and public reporting
and supported a variety of efforts to examine and help address racial and
ethnic disparities.
Figure 1: Measurement Enterprise Organizational Wheel
E SET
UAT PRI
OR
- E VAL ITI
RE E S
• Agency for • National Quality

Healthcare Forum’s National
Research Quality Priorities Partners *
D
RE
• Foundations
EV
• Other
CA
E
LO
E
OV
• Prof. Societies
P
and Boards
ME
PR
• Quality Improvement • Centers for Medicare
AS
M
Organizations & Medicaid Services

PI
• Regional Collaboratives • Agency for Healthcare
UR
• Providers Research & Quality
HEL
E
• Health Professionals • Others **
S
• Oversight Organizations
• Employers • National Committee for Quality Assurance
• Health Plans • Joint Commission
• American Medical Association’s
Physical Consortium
Performance Improvement
ENDORSE & RE-EV

NCENTIVES
• Federal/State Govt.
• Health Plans
• Employers • National Quality Forum
• Consumers
• Providers
IS H I L
ALU
TAB
• Quality Alliance
Steering Committee
ATE
ES
• Quality Alliances
• Joint Commission
• Regional Collaboratives
• National Committee for
• Federal/State Govt.
Quality Assurance
• Health Plans • Quality Alliance • Medical Specialty Boards
• Other Steering Committee
DE
• Regional Collaboratives
• Regional Health Information
V
Organizations/Health
EL
A
ST I
AT
Information Exchanges
O
R
P
D • Centers for Medicare M AT

T & Medicaid Services PL EG
OR • States EM IE
EP R • Health Data Stewards EN S
TA
TIO
N
PILOT TEST
* List of all involved partners available
** Nursing, Academic Communities, etc.
Source: Quality Alliance Steering Committee, 2008.

Available at www.healthqualityalliance.org/resource-library. Accessed on September 5, 2009.
C hapter 5
Around the same time, QASC also developed a so-called measurement enterprise
“vision wheel” in an attempt to capture the prevailing consensus view of the
emerging national measurement enterprise41 (see Figure 1). This wheel depicts
an ongoing, concerted, loosely coordinated effort in which NQF, through NPP,
establishes national measurement and reporting priorities, various entities develop
measures in response to those priorities, and NQF evaluates and endorses those
measures. A variety of national and regional entities then implement the measures
and begin public reporting of them, payment incentives key off those reported
measures and promote improved care, and then the cycle continues.
As noted above, in November 2008, NQF convened the NPP to establish and
set national improvement priorities.42 The 32 NPP partners have all agreed to
work together and with other leaders across the nation to promote improvement
in performance measurement, public reporting, payment systems, research and
knowledge dissemination, professional development and system capacity to achieve
the established priorities.43 Those priorities are: engage patients and families in
health care decision-making; improve the health of the population; improve
health care safety; ensure patients receive coordinated care; guarantee appropriate
end-of-life care; and eliminate overuse while ensuring appropriate care. This priority
setting function is depicted in Figure 1 at the top, right part of the circle.44
Finally, in early 2009 in anticipation of a national health reform debate, a

group of health care stakeholders from across the nation developed a set of
recommendations and core principles that they, as a group, believed necessary for
“high quality, affordable health care.”45 They developed a set of recommendations
from the measurement enterprise to inform the national health reform discussion.
This large group of approximately 200 major national health care stakeholders,
called “Stand for Quality”, noted that measures are the core building block to
provide high quality care and emphasized the accomplishments of the existing
measurement enterprise. In letters to key Congressional committees dated June 17,
2009, this large group of national health care leaders noted prominently that their
recommendations are all based on linking measurement and public reporting to
any reform efforts.46
Regional Measurement and Reporting Efforts
As noted above, at around the same time that the national leaders were making
progress with national aspects of the measurement enterprise, parallel efforts
began to develop at the regional level in many sites across the country. The
measurement enterprise vision diagram (see Figure 1), in fact, specifically
incorporates the important perceived role of regional collaboratives in the
implementation of measures for public reporting.
There are currently, by some estimates, more than 70 regional, multistakeholder

efforts of varying types across the country devoted to improving health care
quality and working in some capacity on measurement and reporting activities.47
Several efforts predominate: the Better Quality Information Project, the
RWJF Aligning Forces for Quality initiative, and the HHS Chartered Value
Exchange program.
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Better Quality Information Pilots
In 2006, the AQA and AHRQ selected a set of six communities to participate in
a two-year pilot program called the Better Quality Information to Improve Care
for Medicare Beneficiaries Pilot Project (BQI pilots) sponsored by CMS.48 The
six BQI communities were each organized around a multistakeholder leadership
group. The geographic area covered by the sites varied. Some were entire states,
some counties, some multiple counties and some groupings of clinics across a
state.49 The intent of the effort was for the participating pilots to make progress
on developing ambulatory measures and reporting those measures to the public.
The effort combined both Medicare data and private data to construct pilot site
measures. All but one of the BQI pilots made progress with public reporting of
ambulatory measures during the approximately two-year effort.
Aligning Forces for Quality Initiative
At about the same time in 2006, RWJF launched the pilot phase of a long-term
$300 million initiative called Aligning Forces for Quality (Aligning Forces). Aligning
Forces helps communities work on three overlapping areas of activity in each
community.50 The Aligning Forces initiative attempted to take learning from prior
efforts that may have focused on only a single potential driver of quality, such
as just attempting technical quality improvement, or promoting measurement
and reporting, or using a single stakeholder perspective, like purchasers. Instead,
this initiative attempted to prompt all relevant stakeholders in a given health
care market to work together collaboratively on three important likely drivers
of regional health care improvement.51 The three areas are: 1) advancing
measurement and public reporting; 2) developing quality improvement resources;
and 3) engaging health care consumers.
The initiative started with four pilots and has grown to include 15 participating
communities. Like the BQI pilots, Aligning Forces work is also based upon a
multistakeholder alliance of leaders in the given region.52, 53 Three Aligning
Forces communities are entire states, while most are comprised of multiple
counties. One community is a very rural county, and one other spans a state
border into two state jurisdictions. Two of the former BQI sites are now Aligning
Forces sites. The initiative provides grant support and technical assistance to
participating alliances to perform the Aligning Forces work.
The Aligning Forces communities have committed to making substantial

improvement in producing performance measures and publicly reporting those
measures, developing local resources to help health professionals improve the
quality of care and coordinating efforts to engage the public in the respective
communities to use health information in making care decisions. All of the
Aligning Forces communities have committed, for instance, to release a set of
NQF endorsed ambulatory care measures for at least 50 percent of the primary
care physicians in their community by February 2010. As of September 2009, eight
of the 15 communities have already met that target. The program reports that the
remaining seven are all on target for meeting that goal as well.
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The Aligning Forces communities have all committed to incorporating, at a

minimum, the Hospital Compare inpatient measures into their public reports by
December 2009. All of the communities are reportedly on target for meeting that
goal. In addition, the Aligning Forces communities are making iterative efforts to
make their reports helpful to the consumer public. The initiative has developed
a common agreement as to the key elements that a so-called consumer friendly
report would include, and the communities are working to make those reports
meet those guidelines.54 They are also in varying stages of planning and developing
a local quality improvement resource to help physicians and nurses improve care.
The effort is also helping the communities develop ways to enhance the collection
of race, ethnicity and primary language data and incorporate that demographic
data into the measurement and reporting effort.
Chartered Value Exchanges
In 2008, HHS launched a similar regional improvement program called the

Chartered Value Exchange (CVE) program to help participating communities
improve the quality and cost-effectiveness of the health care in their community.55
There are now 25 CVEs across the nation. CVEs also are organized around a
multi-stakeholder leadership alliance and are working on roughly the same set of
activities as the Aligning Forces communities. Thirteen of the 15 current Aligning
Forces communities are involved in some manner with a CVE. CVEs receive a
range of technical assistance funded and coordinated by AHRQ.56
Regional alliances like the Aligning Forces and CVE communities who are
attempting to advance measurement and reporting at the local level face a number
of challenges. To create regional ambulatory care measures, each regional alliance
had to develop a locally unique way to do that. Most of the original regional
alliances created measures from administrative claims-based data. Some had limited
access to clinical data and also began to incorporate that clinical information
into the measurement process. Most, though, relied on claims data. That meant
that most relied on regional or national health plans to agree to participate in the
regional effort and provide the claims data to construct the regional set of measures.
There was no standard set of measures across the regions or a standard method of
aggregating the data or constructing the measures. That meant that each community
had to develop a unique set of agreements with the relevant health plans, engage a
unique data aggregator and create measures for their community. They also had to
develop a local dissemination method for the measures.
As the number of regional alliances proliferated, national health plans faced

increasing numbers of requests for claims data. That increasing pressure for claims
data in turn prompted the national plans to work together to begin to develop
some sort of common approach to meet this increasing demand for claims data.
The HVHC Project working with the America’s Health Insurance Plans Foundation
developed a methodology for aggregating claims data across multiple plans using
a so-called distributed data model.57 That method essentially makes it possible for
health plans to construct measures internally using an agreed upon statistical format
and then aggregating the measures externally arithmetically. That method is currently
undergoing pilot testing in Colorado and Florida.
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The potential promise of that common data aggregation methodology, however,

did not solve the data aggregation problem for the regional alliances. Instead, it
highlighted a new question: Where is the ideal locus for claims data aggregation?
Is it with a regional alliance? Or is it with some sort of national hub? Most of the
regional alliances are still developing sustainable business models to support their
improvement work. Some, though, have leveraged the value of their regional data
aggregation, measurement construction and reporting ability to support an income
stream. A national data aggregation model would, in that case, be a potential threat
to such a business model. Here, solving one measurement problem raised new
questions and potential problems for other aspects of the measurement enterprise.
Any tensions, though, between regional and national efforts, like the locus
of aggregation of claims data question, are in all likelihood largely temporal.
Most acknowledge that claims-based measures are only a transitional stage of
the measurement enterprise evolution. As noted previously, measures based
predominantly on clinical data extracted electronically from a variety of sources
would be significantly more desirable.
Notwithstanding any perceived regional-national tensions, the measurement

enterprise leadership recognized the importance of both regional and national
efforts. (See Figure 2.) Both NQF and QASC have made efforts to bring regional
alliance leaders into the national decision-making process. The perspective is
that health care is delivered locally and many of the measurement, reporting and
improvement challenges must unfold at the local or regional level. The national
level, alternatively, is viewed as the best place for standard setting and helping
with activities that do not require unique regional solutions.
Figure 2: Regional-National Feedback is Essential
Innovation
National
Coordination
• Performance Measures
• Methodology
• Technology
Regional • Data Aggregation
• Promotion of
Regional
Experience Best Practices Experience
• Data Aggregation & Integration • Data Aggregation & Integration
• Performance Reporting • Performance Reporting
• Consumer Engagement • Consumer Engagement
• Performance • Performance
Improvement Improvement
Consistency
Source: Quality Alliance Steering Committee, 2008.

Available at www.healthqualityalliance.org/resource-library. Accessed on September 5, 2009.
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Measurement and Reporting Functionality in Adopted EHRs—How Was it Going Pre-HITECH?
Even without widespread adoption and use of health information technology, the
measurement enterprise has made significant progress at both the national and
regional levels. In approximately 10 years since the launch of NQF, the field now has
more than 500 nationally endorsed, standardized measures for a variety of aspects
of health care. In the course of three or four years, there has been a significant
increase in the number of measures constructed and reported for both inpatient and
outpatient care. In approximately three years a large number of regional reporting
initiatives have launched and are making headway. Prior to 2006 there were only a
few reports on hospital care. Leapfrog was essentially a seminal effort. Now, there
are public reports on process, outcomes and patient experience for virtually every
hospital in America. Similarly, there are an increasing number of communities
with public reports that include ambulatory care. Most of this measurement and
reporting progress, however, has occurred using claims-based, not clinical, data.
Claims-based measures provide important information. They also, however,

have a number of important limitations. As noted in a recent Health System
Change commentary, “[c]laims and administrative data have inherent
weaknesses in documenting all services provided to a patient by a physician and
in capturing legitimate reasons why certain services were or were not provided—
information that is critical for an accurate assessment of physician performance.”58
Claims-based measures often have reliability problems as well as inadequate
sample size problems.59 There are also problems with physician attribution.60
Most experts believe that measures based entirely on administrative claims
data will ultimately have limited usefulness and will not provide the kind of
information necessary to drive fundamental payment reforms. Extracting clinical
data manually, of course, is not a viable large-scale solution. It is too labor
intensive and expensive. The critical next step, then, is to integrate clinical data
extracted electronically from a variety of sources. In particular, there is intense
interest in the ability of widely adopted EHRs to provide this information to
advance the measurement and reporting enterprise.61, 62
Unfortunately, the rate of EHR adoption has remained stubbornly low. Both the
2008 edition of this report and the current edition highlight that relatively small
numbers of physicians and even a smaller percentage of hospitals, at the time of
those surveys, had actually implemented an electronic health record. Adoption in
ambulatory settings is about 4 percent for a so-called “fully functional” EHR. The
ambulatory rate of adoption increases somewhat to 13 percent for a “basic” EHR.
Similarly, in the inpatient setting the rate of adoption is less than 2 percent having
a fully functional EHR and a little less than 8 percent have a basic version. Both
of those surveys used the same definitions developed in the 2006 edition of this
report for an EHR as well as for a basic and fully functional system. Importantly,
though, neither the definition of a basic nor a fully functional EHR include the
ability to facilitate extraction of clinical data for measures, construct measures or
report measures. In fact, presumably if researchers calibrated the rate of adoption
to include this measurement and reporting function the already very low rate of
adoption would likely fall even lower.63, 64
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A number of studies have shown, though, that EHRs are a viable source of
information for measurement and reporting.65, 66, 67 Some researchers have noted
that performance measures become “strikingly” more clinically relevant when
EHR-based.68 Experts predict that if and when more physicians and hospitals
adopt EHRs, policy-makers will “design measurement systems, and incentive
programs based on them, to take advantage of computer-based information
systems that will become the new standard of care… Likewise, a transition plan
should be developed to migrate the nation’s use of administratively based quality
measures to clinically based quality measures.”69
Will HITECH Driven Meaningful Use Accelerate Measurement and Reporting Efforts?
HITECH authorized significant federal expenditure for a number of activities

intended to improve the quality of health care by the use of health information
technology. Specifically, HITECH authorized, among other things, CMS to
provide at least $17 billion in financial incentives for eligible health professionals
who implement and use EHRs.70 (See Chapter 4.)
The HITECH incentives all hinge on the so-called “meaningful use” of the
EHR. HITECH provides some general statutory guidance on the definition of
meaningful use. The statute provides that meaningful use of an EHR requires
that an eligible professional is using a certified EHR in a “meaningful manner.”
The professional must demonstrate that the EHR is connected with other related
technologies so that pursuant to appropriate laws and standards it can facilitate
the electronic exchange of health information in ways that improve health care
quality. Finally, the professional must use this EHR to report clinical quality
measures to improve the quality of health care. The secretary of HHS must select
the measures that will be reported under this meaningful use definition and must
work to avoid redundant reporting.
HITECH formally authorizes the National Coordinator for Health Information

Technology (National Coordinator) and the Office of the National Coordinator
within HHS. President Bush initially created the office in 2004 by executive order.
HITECH also provides for the creation of two new advisory committees under
the Federal Advisory Committee Act that will give important advice and input
to ONCHIT: the HIT Policy Committee and the HIT Standards Committee.
Previously, the prior secretary of HHS convened another advisory group called
the AHIC or “American Health Information Community.” AHIC provided
advice and recommendations on accelerating adoption of health information
technology to then-Secretary Leavitt from 2005 to 2008. In late 2008, the work of
AHIC ended and a new public-private entity, the National eHealth Collaborative
(NeHC) took over many of the AHIC functions. As a new entity, NeHC is
still establishing its new advisory role. In addition, the National Committee on
Vital and Health Statistics (NCVHS) has provided advice to the secretary, or
that office’s predecessor, for more than 50 years on health statistics and health
information related matters. It is a forum in which private sector experts can
provide important technical and policy advice to the secretary.
The National Coordinator has charged its various advisory committees,

particularly the HIT Policy and Standards Committees, to develop detailed
proposed framework, criteria and recommendations for the definition of
“meaningful use.” CMS and ONCHIT are reportedly working extensively on the
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proposed elements of this definition. CMS will take those recommendations

and then develop and publish a definition of meaningful use in 2010 along
with the criteria for the EHR payment incentives.71
Status of the Meaningful Use Definition
In April 2009, NCVHS convened a public meeting to gather input to help define
meaningful use. That committee submitted its initial report of that hearing to
ONCHIT in a May 2009 letter and its summarized observations in June 2009.72, 73
Among other things, the committee observed that the vision of meaningful
use should be framed by a predictable phased path toward use of electronically
generated information that promoted quality outcomes and health care value.
The primary focus should be on the use of the technology, not the tool.
Importantly, the committee noted, among other things, that the technology
must facilitate development of measures that can be used by health professionals
and individuals to improve patient care and that the use must be designed to
promote payment reforms that will reward high value care.
In June 2009, the HIT Policy Committee held its first public meeting and has
met routinely since that time. At the opening meeting in June, the HIT Policy
Committee’s Meaningful Use Working Group presented an early draft of
recommendations on the important criteria for the meaningful use definition.74
The Meaningful Use Working Group explicitly based its meaningful use
framework and proposed criteria on the NQF NPP priorities. The Working
Group also presented a matrix that outlines priorities, care goals and objectives
over time starting in 2011 and extending through 2015.75
The draft meaningful use criteria, so far, reflect most of the themes in the NCVHS
recommendations. The draft framework and criteria highlight that meaningfully
used EHRs will focus on promoting high quality outcomes. The technology
should be a tool to help patients and health professionals get information and
use the information to promote high quality.
ONCHIT asked for public comment on those initial recommendations and

received more than 800. According to ONCHIT staff, the comments provided
general strong endorsement of the health care outcomes focus of the meaningful
use draft recommendations. For instance, MedPAC noted in its comment letter
that, “the criteria should incorporate specific measures of clinical processes and
outcomes supported by or enabled with the use of health IT, and not based simply
on the presence of IT in a hospital or provider’s office or its use for administrative
functions such as billing and patient record-keeping. Eventually, the criteria
defining meaningful use should support payment policy reforms that will drive
health care delivery systems improvements, for example reducing payments to
hospitals with significantly high readmission rates and financially rewarding
providers that efficiently deliver demonstrably high-quality care.”76
Working in parallel with the HIT Policy Committee, the HIT Standards
Committee is making recommendations on standards that will be important for
meaningful use of the EHR.77 Based on the meaningful use priorities and care
goals outlined by the HIT Policy Committee, the HIT Standards Committee
is developing a recommended set of measures and related standards for those
measures that will be reported as part of meaningful use of EHRs. This work of the
Standards Committee, in turn, builds on prior work of NQF, AHRQ and AHIC.
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In 2007, NQF under an AHRQ contract and at the request of the AHIC
convened an expert panel on HIT, the Health Information Technology Expert
Panel (HITEP).78 While most experts recognized the potential of HIT and EHRs to
provide the clinical information necessary to advance measurement and reporting,
the current standards were not supporting that measurement and reporting function.
NQF convened HITEP to develop recommendations that would help make EHRs
support measurement construction and reporting. Specifically, the panel would
make recommendations on standardizing the basic building blocks, or data
elements, necessary for constructing quality measures. In 2008, HITEP issued a
report that identified 11 key data categories and 39 data types that will be important
for constructing measures from electronic clinical sources.
HITECH provisions promoting rapid implementation of EHRs for meaningful

use have only further highlighted the need for additional standardization work
that will facilitate the electronic extraction of clinical information for constructing
and reporting of measures. In early 2009, NQF with funding from AHRQ
reconvened HITEP to further advance this standardization work. HITEP is now
working to help accelerate the development of standards to support the use of
HIT and EHRs to create and report performance measures.79
How Will Meaningfully Using EHRs Impact the Measurement of Clinical

Quality and the Reporting of Those Measures?
Much of the work on the definition of meaningful use has focused most
prominently on creating the overall framework, criteria and either the re-tooling
or the development of the measures themselves. There is another important step,
though. To be helpful, that is to be meaningful, the measures and the information
from those measures must be reported somewhere. HITECH requires that the
measures be reported, for instance, to the secretary, at least as a first step. The
measurement enterprise and huge body of quality improvement work invested
in measurement emphasize the need for measures to be reported publicly for all
stakeholders to use to improve health care quality. Just as the current technology
and standards do not easily facilitate either the extraction of clinical information
or the creation of the measures, they also do not facilitate electronic reporting of
those measures. This electronic reporting capability and the standards to support
the reporting function are themselves critically important gaps.
Another group with an important role in developing the measurement and

reporting standards is the Healthcare Information Technology Standards Panel
(HITSP).80 HITSP formed in 2005 as a public-private collaborative effort to
make recommendations on HIT standards and harmonize various standards to
advance health care quality. HITEP and groups such as HITSP are developing
recommendations, identifying gaps and working to piece together the various
standards to create an overall model for constructing measures from electronically
generated clinical information and then reporting those measures. These groups
are now submitting their recommendations back to the HIT Standards Committee
in order to build a model for creating electronically generated and reported
measures and fill in the various standard gaps for that model.
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For instance, previously there was no standard for sending or reporting quality
measures, once constructed, to an aggregator or other requestor. In 2007 an
independent private effort called the Quality Reporting Document Architecture
(QRDA) initiative sponsored by the Alliance for Pediatric Quality developed a
potential standard for the electronic exchange of quality measures.81 Prior to the
development of QRDA there was essentially no standard for reporting quality
measures to a requesting entity or system—such as a data aggregator. Without the
reporting standard, electronic reporting of these electronically generated, clinically
based measures cannot really occur. Therefore, for electronic measurement and
reporting of all kinds this sort of technical standard gap is critical. HITSP has
now completed public comment on QRDA. The HIT Standards Committee is
reviewing QRDA to determine if it should be the required standard for reporting
meaningful use measures in 2013.
Separately, in September 2009, NQF working with a standard development group,

HL7, announced a new data standard for so-called “e-measures.” 82 E-measures
will make it possible to extract data from records for the creation and reporting
of measures. This new standard is designed to represent a quality measure as an
electronic document. Through standardization of a measure’s structure and other
important aspects of it, the e-measure provides for consistency and unambiguous
interpretation. NQF supported the development of the e-measure standard in a
contract with HHS.
These efforts to develop standards that facilitate the use of HIT to create and
report measures electronically are ultimately likely to change the way many
currently approach measurement construction, aggregation of data and reporting.
It seems likely that such a new HIT-enabled measurement infrastructure would
have a significant impact on the current vision of the measurement enterprise
that stakeholders developed in an almost exclusively claims-based measurement
environment. (See Figure 1.) So how is the electronically generated measurement
model evolving? What might the model look like right now? (See Figure 3.) 83
Figure 3: Quality Framework with Electronic Measurement and Reporting*
Measure Development NQF HITEP

Quality
eMeasure Specification Dataset ONCHITSP Quality Use Case
NCQA, AMA, APQ…
Measure Definition
The Collaborative, RAND…

eMeasure Specification
Feedback
HIMSS IHE:
Multi-party choreography
using HL7 messages, services
Aggregators, Requestors
* Reprinted with permission from National Quality Forum
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The current measurement enterprise model depicted in Figure 1 envisions priority

setting and identification of measurement gaps by the appropriate national entity.
In a HIT enabled measurement enterprise that step would not seem to change
given current meaningful use definition recommendations that start with the
current priority setting mechanisms. But from that point, things do start to change
potentially—particularly in the construction, implementation and reporting of
electronic measures. As indicated in Figure 3, measure developers would define
and develop measures that have a specific set of standard quality datasets attached.
Those measures would then be constructed as so-called e-measures. From there
the various EHRs could then report individual level measures to requestors for
a variety of uses, including aggregating for reports. This final step would rely
importantly on the QRDA standard or some similar reporting standard to allow
the EHR systems to communicate with the requestor or aggregator electronic
systems, for instance.
Much of this new measurement and reporting model depicted in Figure 3 likely
remains in flux as the actual definition of meaningful use is not final. But this
example highlights the potential tremendous implications and importance of
that meaningful use definition. A model like this one relying on electronically
generated clinical information could prompt many to reconsider current thinking
about the so-called measurement enterprise depicted in Figure 1. In such a
model who aggregates and creates reports, for instance? Do regional efforts still
have a significant role? Does such a model simplify the measurement enterprise
vision or make it more intricate and complicated? How does the vision account
for collecting clinical information from a wide spectrum of sources (i.e., lab,
pharmacy, EHRs, hospitals, PHRs) not just one stakeholder like health plans
in a claims-based measurement environment?
In any event, it appears that the various ONCHIT Committees, working groups
and related organizations are attempting to address many of the primary technical
issues related to developing electronic clinical measures for reporting. But there are
also likely many important outstanding gaps. For example, what about the host
of concerns that many have raised about claims-based measures for reporting? Do
the current standards and plans for developing electronically generated, clinically
based measures address those problems? Do the standards address the physician
attribution problem? In order for a physician or other health professional to be
comfortable that a given measure pertains to the care she provided, the physician
must be assured that the patient was, in fact, her patient. It’s not clear at all that the
current electronic measure work has addressed this problem adequately.84 Further,
how do the electronic systems recognize a given patient across a variety of clinical
settings?85 It’s not clear if the work so far has adequately addressed that problem.
And there are other concerns about statistical validity and reliability of electronically
generated clinical measures.86 For instance, how many patients are necessary to
make a given measure a reliable picture of the care a given physician or group of
physicians is providing? It’s not clear that the work, so far, has adequately addressed
this point either. It is entirely possible that the work to advance claims-based
measures and reporting will inform the solutions for many of these problems,
but it’s not clear that anyone is addressing them yet.
Other problems that the claims-based measure and reporting effort has
encountered are more relational or political. For instance, previously as health
plans began moving more assertively to report on a variety of metrics and
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then group physicians into tiers or categories according to their performance,

physicians strongly resisted many of those efforts.87 In New York, state regulators
became involved because of that potential clash. From that New York experience,
business, consumer, health plan and physician leaders developed what they called
a “Patient Charter for Physician Performance Measurement, Reporting and Tiering
Programs”88 to address many of these tensions and potential problems.
That Patient Charter required among other things that measures must be
meaningful to consumers; that those being measured must be involved in the
measurement process; that those measured have the ability to review a measure
and potentially challenge and revise measure results; and that the measure
methodology be transparent and valid. The Patient Charter, arguably, helped to
address many of the fundamental physician concerns about measurement and
reporting. It is not clear, though, how current efforts to develop electronically
generated clinically based measures might, in turn, address the kinds of concerns
highlighted in the Patient Charter experience. The field may ultimately need to
develop an “E-Patient Charter” for example.
The Role of Consumers in Determining Measures for Meaningful Use
As noted, the Patient Charter specifically highlighted the consensus view that
measures must be meaningful to consumers, that they should convey both quality
and cost information and that they should provide input on the methods to
select and develop the measures. Further, others have emphasized the importance
of including all stakeholders in the meaningful use process. NCVHS in its
observations on meaningful use to ONCHIT noted that “[a]chievement of the
vision of health and health care transformed requires the dedication of people
and organizations—all stakeholders—to focus on ensuring patient-centered,
coordinated, quality care.”89
The HIT Policy and Standards Committees all have consumer advocacy members.
And NQF has made significant efforts to include consumer advocates in its
endorsement process and the priority setting process. Nonetheless, the current
draft recommendations for meaningful use do not necessarily explicitly reflect
that these draft measure sets are intended for public, consumer use or that the
relevant decision makers selected them based on what consumers might actually
find important or helpful in making health care decisions. So far, the role of
the consumer in the meaningful use definition discussion has been tenuous and
ambiguous, at best.
Impact of Meaningful Use Measures on Disparities
Will HIT enabled measurement and reporting help reduce disparities or make
them worse? Racial and ethnic health care disparities are an important part
of the nation’s health care quality challenge. The IOM in the Crossing the Quality
Chasm report specifically included equity as one of the six key aims of health
care quality.90 Each year since 2005 AHRQ has released an annual congressionally
mandated National Healthcare Disparities Report (NHDR) to monitor the status
of health care disparities. The 2008 report again indicates that we continue to have
significant racial and ethnic health care disparities.91 That means that while we
overall have a national health care quality problem, that quality is also different
for different people. The report highlights that the disparities for blacks, Asians,
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American Indians/Alaska Natives and Hispanics remain a major challenge. It

notes that for these groups “at least 60 percent of measures of quality of care
are not improving (either stayed the same or worsened).”92
Many have voiced concern that some efforts to improve quality, especially the
accelerating efforts we describe in this report to measure and publicly report
performance and also efforts to use those measures to support payment incentives
that reward improvement, could in some hypothetical instances worsen the
disparities problems.93, 94 An extensive systematic review of this literature by
Chien et al. funded by the Robert Wood Johnson Foundation noted many of
these potential concerns.95 These researchers noted that some reporting efforts
could potentially encourage “one-size-fits-all approaches” which would likely not
help address disparities. They note that reporting might encourage “cherry
picking” behavior such that health professionals might drop difficult-to-manage
patients or patients with multiple difficult-to-manage conditions and limited
resources to enhance performance metrics thus potentially worsening disparities.
The Chien review examined more than 41,000 articles related to either public
reporting or payment incentive programs. Of those, 536 articles pertained to or
mentioned race and ethnicity. The review ultimately, though, found no evidence
about the effects of performance incentives on disparities and only one pertaining
to public reporting impacts on disparities. That one study attempted to assess the
impact of a New York state program to report coronary artery bypass (CABG)
mortality rates by comparing the New York CABG rates for various races with
rates in states without reporting. In all states the CABG rate was higher for whites
than for the racial minorities examined. The study found that the disparities gap
widened after the public reporting effort began and that it remained the same in
the states that did not report.96
Given the dearth of evidence, these researchers also conducted structured

interviews with a set of key health care leaders to gather expert opinion about the
potential impact of reporting and payment changes that reward improvement
on disparities. From these interviews the researchers summarized four
recommendations for using reporting and payment changes to reduce disparities.
The leaders, in commenting about reporting and payment changes, were in
general “enthusiastic about their potential for improving the overall quality
of health care…”97 They recommended that in conjunction with those efforts,
though, reporting and payment initiatives also: improve the collection of race and
ethnicity data for stratification of the measures; emphasize conditions that impact
minorities; reward improvement rather than just achieving a given score; and
encourage relevant national measurement enterprise entities to address
disparities explicitly.98
While the one New York study indicating potential negative impact of public
reporting on disparities is cause for concern, the leaders in the measurement
enterprise are working to make it more likely that measurement and reporting
efforts will help rather than hinder disparities reduction efforts. As NQF
concluded in a 2007 issue brief on disparities, “it will be important to monitor
the results of multiple studies over time to identify and develop strategies to
mitigate any unintended consequences of public reporting…”100
There are currently a number of activities at both the national and regional
levels to address many of the expert recommendations highlighted in the Chien
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review. It remains true that most hospitals and physicians still do not routinely
collect racial and ethnic demographic data. Most agree improving the primary
collection of race and ethnicity demographic data is an important and difficult
challenge, one that a recently released IOM report suggests we must address.99
The report makes clear that federal entities, such as CMS, Veterans Affairs and the
Department of Defense, should systematically collect race, ethnicity and language
data and provide financial incentives for private health professionals to do so.
The IOM also suggests that policy-makers consider the variety of indirect methods
of estimating race and ethnicity in a given population, although these indirect
estimation methods do not provide the granular information necessary to inform
measures and guide improvement.
NQF has endorsed a set of performance measures specifically to address racial

and ethnic disparities.101 In the AHRQ National Health Plan Collaborative,
10 major national health plans worked collaboratively to find ways to improve
primary collection of racial and ethnic demographic data.102 The HVHC project
is working in a variety of pilots across the nation to identify ways to improve
collection of primary racial and ethnic demographic data.103 The Aligning Forces
regional initiative also includes an explicit focus on racial and ethnic disparities.104
The Aligning Forces communities, for example, have all committed to improving
the collection of racial and ethnic demographic data and incorporating that
information into their measurement and reporting efforts. The current draft
recommendations pertaining to meaningful use of EHRs also explicitly highlight
using the electronically generated information from that use to address racial
and ethnic disparities.105
Transition From Claims-Based Measures to Clinically-Based Measures—

Who’s Minding the Glide Path?
An important detail about the recommendations and plans for meaningful use
of the EHRs is that it will be phased in over a period of years. The first phase of
this meaningful use is not intended to begin until 2011. ONCHIT and others
will be revising the definition, criteria and expectations iteratively through, at
least, 2015. Further, as noted above, the current rate of EHR adoption is very low.
There is also the current largely claims-based measurement effort in place now.
Notwithstanding the extensive plans and promise of the meaningful use of
EHRs, measurement and reporting efforts probably cannot simply stop and
wait for meaningful use to begin. The field will, then, need to develop a host
of strategies to move from the current claims-based measurement environment
toward one that is predominantly built around electronically generated sources of
clinical information.106
In August 2009, QASC through its HVHC Project released a draft plan that
proposes ways, over a period of three years, to knit together an increasing variety
of efforts in a coordinated strategy to bring more and more electronic clinical data
into the measurement process.107 This plan would attempt to leverage things like
electronic registry, lab and pharmacy clinical data to enhance electronically captured
administrative claims data. Beyond this preliminary plan, however, there does not
appear to be any other systematic effort to guide the transition from the current
measurement environment to one with ubiquitous meaningful users of EHRs.
C hapter 5
Why All the Fuss? Measurement and Reporting are Necessary for Payment Reforms
That Reward High Quality and Value
This chapter began by noting that the evidence that performance measurement
and public reporting of those measures actually helps improve quality of care
is limited. There is also limited evidence or even experience to highlight the
potential unintended consequences of measurement and reporting. Nevertheless,
virtually all the major stakeholders in health care based on unequivocal and
specific expert recommendations are working to develop an increasingly
sophisticated measurement and reporting infrastructure. Why would that be?
The answer seems to pertain to payment. Many believe that our ability to reform
health care hinges largely on our ability not only to increase coverage for and
access to health care but also to address the underlying fundamental dysfunction
of health care—poor quality, exploding cost, and payment systems that hinder
efforts to improve. The current national health reform debate reinforces the
important potential role of measurement and reporting in solving many of these
fundamental problems.
MedPAC, for example, has consistently strongly recommended measurement and

reporting as an important piece of payment reforms. In its March 2005 report, it
noted that:
Medicare already uses a variety of strategies to improve quality for beneficiaries… MedPAC
supports those efforts… Most of those efforts, however, are grafted onto a payment system
with few incentives for delivering high-quality care. Medicare, the largest single payer in
the system, pays all of its health care providers without differentiation based on quality.
Providers who improve quality are not rewarded for their efforts. In fact, Medicare often
pays more when a serious illness or injury occurs or recurs… The incentives of this system are
neutral or negative toward improving the quality of care… [Q]uality measures can be used
to distinguish among hospitals, home health agencies, and physicians… Expanded use of IT
would also increase the ability to measure and reward good performance.108
Many also look at state experiences with health reform for guidance. In 2006
Massachusetts passed a law providing for near universal insurance coverage for
its citizens. A report on the first year experience of the Massachusetts reform
noted, though, that the reforms and the universal coverage from the reforms
“will become unaffordable—for individuals, employers, and government—unless
health care spending can be brought under control.”109 In searching for solutions,
Massachusetts contracted with RAND Corporation to prepare a report suggesting
a range of cost containment options including estimates of potential savings.110
That August 2009 report identified a host of potential interventions, but the one
with the greatest cost savings potential was payment reform. Specifically, the group
modeled a type of payment that would reward improvement in quality and cost
to replace the current fee-for-service scheme. They examined so-called bundled
payment proposals that provide a single payment for all the care necessary over a
given episode. These payments would be designed to reward efforts to eliminate
services that are wasteful, unnecessary and of low value and to reward high
quality, high value outcomes. They estimated that this kind of payment could
save Massachusetts up to $30.3 billion over a 10-year period.111
C hapter 5
Another recently published analysis of a kind of bundled payment reform noted

similar large potential savings for the nation:
Our analyses of several national and regional data sets, in addition to our pilot work, show
that PACs [potentially avoidable complications] account for 22 percent of all private-sector
health care expenditures in the United States. The data show that PACs can account for as
much as 80 percent of all dollars spent for conditions such as congestive heart failure that
require intensive management and that there are significant regional variations in PACs.
On the basis of our current findings, we project that even a modest reduction in PACs from
one year to the next would have a considerable effect on the private sector’s portion of health
care spending over the next 10 years. If such results were replicated in a Medicare population,
the potential savings would double, reducing the country’s health care bill by more than
$700 billion over 10 years.112
These kinds of value focused payment changes depend on, among other things,
robust, accurate reported measures of performance and cost. To realize the
potential of these and other kinds of payment reforms, accurate measurement
and reporting is necessary.
Finally, in September 2009, to help inform the national health reform

discussion, a group of 10 prominent health care economists released a set of
10 key recommendations designed to address long-term health care spending
challenges.113 They noted that in order to address the cost challenges health
professionals, employers, consumers, insurers and government would need
to work together to help move health care from a system that promotes high
volume, fragmentation and dysfunction, to one that encourages collaboration,
accountability, improvement and value. Their recommendations include a
wide array of reforms touching on health information technology, comparative
effectiveness, workforce, payment, the delivery system, insurance markets and
prevention. A prominent theme throughout was, again, better information—better
measurement, improved tools to highlight quality and high value, enhanced
public reporting of outcomes and more publicly available quality and cost
information to support individual decision making.
Information about the quality and value of health care, then, is viewed as critical
in most proposed solutions to the fundamental challenges of the health care
problem—high cost, poor quality, fragmentation and dysfunction. From that
perspective, the clear consensus advice, intense interest and increasing investment
in building the measurement and reporting enterprise seems more than justified.
C hapter 5
Conclusion
The stakes could not be higher. Health care costs are increasing persistently.
Projections for the federal government’s obligations for Medicare and Medicaid,
before any attempt to cover the millions of uninsured, escalate astronomically
into the future. The nation spends far more than any other on health care, yet
assessments of the quality of that care show that it is too often mediocre or
poor quality and low value. Rather than receiving accolades for being a “high
performing” industry well worth the enormous national investment, health care is
encumbered instead with labels like “fragmented,” “dysfunctional” or “unsafe”.
At this moment, as we search urgently for ways to move health care from that
fragmentation and dysfunction, most agree that information about the quality
and cost of health care is central to almost every viable potential solution.
Unfortunately, the field does not yet have that information—it does not have
entirely satisfactory or ideal measurements or ways of reporting those measures
to professionals and individuals. We also do not yet have a host of experience
or past evidence to inform every step or even prove that these tools will really
work. Instead, we have defined the basic contours of the problem. Now that we’ve
defined the problem, health care leaders from all sectors are attempting to create
and build the viable solutions.
At this critical juncture, as this still new measurement enterprise unfolds with
its foundational work in developing measurement and gaining experience with
reporting, we also find a reinvigorated health information technology sector
flush with new federal investment and direction. That quality measurement and
reporting experience combined with the potential enhancement and acceleration
of wide spread meaningfully applied health information technology could prove
to be the necessary accelerator. Naysayers and skeptics, notwithstanding, we will
know soon enough if this combination of hope, urgent need, innovation and
technology will allow the measurement enterprise to, in fact, fly. That is, we will
know if ubiquitous, publicly available information will help move health care
from fragmentation and dysfunction onto a path of sustainable high value.
C hapter 5
Endnotes
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C hapter 5

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This report was produced by a team of researchers at the Institute for Health Policy at Massachusetts
General Hospital and the School of Public Health and Health Services at George Washington
University. Report editors were: Catherine M. DesRoches, Dr.P.H.; and Ashish K. Jha, M.D., M.P.H.
The report also was informed by the discussions of an Expert Advisory Group and an Expert
Consensus Panel. The authors gratefully acknowledge the support of the Robert Wood Johnson
Foundation and the efforts of the federal Office of the National Coordinator for Health Information
Technology on behalf of this report.
© 2009 Robert Wood Johnson Foundation
Robert Wood Johnson Foundation
www.rwjf.org
Massachusetts General Hospital

Institute for Health Policy
www.instituteforhealthpolicy.org
George Washington University

School of Public Health and Health Services
www.gwumc.edu/sphhs

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Health Information Technology

in the United States:

About the George Washington University Medical Center

The George Washington University Medical Center (GWUMC) is an

About the Institute for Health Policy

The Institute for Health Policy (IHP) at Massachusetts General Hospital

As we have shown in earlier reports, despite broad consensus on the potential

Major Content Areas

In Chapter 4, Recent Federal Initiatives in Health Information Technology, we

Finally, Chapter 5, Potential Implications of Widely Adopted Meaningfully Used HIT:

Carmella Bocchino, R.N., M.B.A.

Paul Tang, M.D.

John R. Lumpkin, M.D., M.P.H.

Sally C. Morton, Ph.D.

In our prior reports, we provided estimates of the rate of adoption of EHRs

We developed our survey by first examining and synthesizing prior hospital-

We collaborated with the American Hospital Association (AHA) to survey all

Respondents were asked to report on the presence of 32 clinical HIT

Development of Measures of EHR Use

We did not include electronic measurement or reporting capabilities in either of

Comprehensive* Basic EHR † with Basic EHR † without

Electronic Clinical Documentation

Diagnostic test results X X X

Diagnostic test images X

Computerized Provider Order Entry

Drug allergy alerts X

Drug-drug interactions alerts X

Drug-lab interactions alerts X

Drug dosing support X

Characteristics of Responding Hospitals

We received responses from 3,049 hospitals, or 63.1 percent, of all acute-care

Adoption of Clinical Functionalities in Electronic Format

We examined the rate of adoption of specific electronic clinical functions among

We found large variations in the implementation of key clinical functionalities

Adoption of an Electronic Health Record

Table 2: Characteristics of Responding and Non-Responding Acute-Care Non-Federal Hospitals

Small (6 beds–99 beds) 48 50

Size Medium (100 beds–399 beds) 43 43

Large (400+ beds) 10 7

Ownership Private nonprofit hospitals 62 55

Teaching Status Minor teaching 16 16

Hospitals with CCU 35 25

Table 3: Select Functionalities and Their Level of Implementation in U.S. Hospitals

Electronic Clinical Documentation % % % %

Diagnostic Test Images

Computerized Provider Order Entry

Drug Allergy Alerts 46 15 16 22

Drug-Drug Interaction Alerts 45 16 17 22

Drug-Lab Interaction Alerts 34 14 21 31

Drug Dosing Support

Table 4. Adoption of Comprehensive and Basic EHR Systems, by Hospital Characteristics

Have Comprehensive Have Basic* Have No Overall

Hospital Size % (Standard Error)

Small (6 beds–99 beds) 1.2 (0.3) 4.9 (0.6) 93.9 (0.6)

Large (400+ beds) 2.6 (0.9) 15.9 (2.2) 81.5 (2.3)

Northeast 1.1 (0.5) 8.9 (1.4) 90.0 (1.5)

Midwest 1.7 (0.4) 6.6 (0.8) 91.7 (0.9)

West 1.9 (0.6) 7.0 (1.2) 91.1 (1.3)

For-profit hospitals 1.3 (0.5) 5.2 (1.1) 93.5 (1.2)

Public hospitals 1.7 (0.5) 5.8 (0.9) 92.4 (1.0)

Major teaching hospitals 2.6 (1.1) 18.5 (2.6) 78.9 (2.7)

Minor teaching 2.4 (0.7) 10.6 (1.4) 87.0 (1.6) <0.001

Non-teaching 1.3 (0.2) 5.6 (0.5) 93.1 (0.5)